Momentum stocks collapse as Nasdaq posts worst loss since 2011

Yesterday's gains proved nothing more than a dead-cat bounce, as traders unloaded their riskiest stock holdings across the board to gird against potential losses during earnings season.

Nasdaq suffered its biggest one-day percent decline since Nov. 9, 2011, and the Dow and S&P 500 took their biggest one-day point and percentage hits since February.

The Nasdaq has now dropped 7% below its 2014 closing high of 4,358 reached March 5, while the S&P 500 closed 39 points lower at 1,833, falling below its 50-day MA and close to crossing its 100-day MA.

Biotechs were hammered, with the top biotech index (IBB) closing -5.6% and dragging down the health care sector (-3.3%), the worst performing sector in the S&P 500; but there was plenty of company, with the tech, materials and financial sectors all down at least 2%.

The significant gap between losses for the Nasdaq (-3.1%) and Russell 2000 (-2.8%) vs. the Dow (-1.6%) and S&P 500 (-2.1%) suggests emotions played a major role in the selling of high-beta names.

Money rushed into Treasurys amid the heavy selling in equities; the 10-year yield slid 5.6 bps to 2.628%, posting its lowest close since March 3, and the yield on the 30-year bond sank 6.2 bps to 3.503%, the lowest close since last July.

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Comments (25)
  • wapiti
    , contributor
    Comments (711) | Send Message
    That MOMO knife cuts both ways , huh CNBC FAst $$ and Cramer?
    10 Apr 2014, 04:40 PM Reply Like
  • Mattster
    , contributor
    Comments (165) | Send Message
    yes its been downhill for momos since Cramer had that show telling everyone to buy momo stocks a few weeks back
    10 Apr 2014, 04:52 PM Reply Like
  • Philip Marlowe
    , contributor
    Comments (1627) | Send Message
    It is clear that it was biotechs that brought everyone else down. Too many people investing in things they do not understand. Unfortunately, today showed that one can never be immune from other people's bad decisions even if one does not participate in them personally.
    10 Apr 2014, 04:44 PM Reply Like
  • w*e*d
    , contributor
    Comments (36) | Send Message
    Hopefully, this cleared out a lot of the riff raff.
    10 Apr 2014, 04:46 PM Reply Like
  • mobyss
    , contributor
    Comments (2654) | Send Message


    What - a 2 or 3% down day? An S&P that's only about 3% off its all-time highs?


    The "riff raff" won't be cleared out until -10%, -15% or maybe into the -20% range. At S&P 1500, you can be sure that all the "me too" investors from the last 12 months will be gone.
    10 Apr 2014, 05:16 PM Reply Like
  • pat45
    , contributor
    Comments (470) | Send Message
    Wow IBB back down to where I sold it..where will it stop??
    10 Apr 2014, 04:47 PM Reply Like
  • wmateri
    , contributor
    Comments (583) | Send Message
    Maybe letting a bit of air out of stocks is the only way to get someone besides the Fed to buy Treasuries?
    10 Apr 2014, 04:54 PM Reply Like
  • MIchelChat
    , contributor
    Comments (152) | Send Message
    It is good to hear/see the general descriptions of the up and down of the stock market, but provide at least a few lines on why (reasons) they are so !
    10 Apr 2014, 04:58 PM Reply Like
  • untrusting investor
    , contributor
    Comments (9906) | Send Message
    since when is a relatively small down move = to a collapse?
    What will a real collapse be called then?
    10 Apr 2014, 05:00 PM Reply Like
  • mobyss
    , contributor
    Comments (2654) | Send Message
    A 5% down move will be called a "Bear Market"


    A 10% down move will be called "Financial Armageddon"


    A 20% down move won't be called anything because everyone in the financial media will have jumped off a 50-story building, and CNBC, etc will just be dead air.
    10 Apr 2014, 05:19 PM Reply Like
  • quabbin
    , contributor
    Comments (127) | Send Message
    Market sell offs are good for the economy.
    10 Apr 2014, 05:14 PM Reply Like
  • Hendershott
    , contributor
    Comments (1898) | Send Message
    Bring out the bears!! NFLX to $100! Where's Herb Greenberg? CNBC will have every bear in existence on the air today.
    10 Apr 2014, 05:24 PM Reply Like
  • Barry North
    , contributor
    Comments (325) | Send Message
    The China trade data released yesterday, seems to be the main reason for the sell off today. China’s economy is cooling with imports falling 11.3% and exports down 6.6%.


    If the supplier of the world's goods is seeing their order book dry up, it means the world is doing it tougher, which will be bad for earnings. PEs have been manipulated by cost cutting and borrowing to carry out share buy backs, not by real growth and this is now becoming evident. If they had real growth, China would be seeing increasing demand.
    10 Apr 2014, 06:14 PM Reply Like
  • buyandhold???
    , contributor
    Comments (907) | Send Message
    that's not true at all. In fact recently I was buying alot of shirts at saks and I noticed nearly every shirt I grabbed was no longer made in china but rather bangladesh,madagscar, or sri lanka.


    China must be an expensive place in comparison these places to get clothing made so they've left. I am seeing more and more things made in other places, so china's data isn't all that indicative of anything to me
    10 Apr 2014, 10:14 PM Reply Like
  • Barry North
    , contributor
    Comments (325) | Send Message
    Well I was not referring to clothing produced in Asian sweatshops, but more the real value added manufactured items. For example China is the world's largest manufacture of steel and their dominance is rising. 48% of all steel produced worldwide in 2013 was made by Chinese mills, up from 46% in 2012 and 45% in 2010. Australia, Brazil etc. export iron ore to China, they make it into steel and then into big ticket items such as ships, cars, TV sets, fridges, solar panels etc. which they export worldwide. I am sure they are happy to leave the very low mark up stuff, like clothing, to the countries you mention.


    The top 10 exporting countries in 2013 are in order China (23% higher than 2nd place), Germany, USA, Japan, France, South Korea, Netherlands, Italy, Russia and UK. So the number one exporter starting to struggle, does have negative connotations for world growth.
    10 Apr 2014, 10:40 PM Reply Like
  • aarc
    , contributor
    Comments (3875) | Send Message
    Biotech has lost a total of 20% top to bottom today:


    >> IBB Daily Chart:


    IBB should be testing the Daily 200ma Support tomorrow. A strong bounce will attract Daytraders and Swing Traders to buy IBB.




    If the ongoing sectors rotation continues; the most recently hammered Biotech, Social, and/or Consumer Discretionary sectors should start a recovery bounce sooner rather than later.


    Same way they did with Utilities, Housing, and Real Estate after the May to June selloff last year.


    The latter 3 have been recovering ever since the June and August lows and more likely already primed for additional 'culling' while the most recently 'culled' sectors are allowed to make a recovery bounce.


    Objective is of course to sell over-valued sectors then buy over-sold sectors in rotation. Net effect is that the stock markets can take a very long time to rally without becoming over-heated so soon. Thus, several pullbacks of 5% to 7.50% for the SnP500 have been going on since June 2013 to Feb 2014 (= 8 months). Unlike during the vertical rally of Nov 2012 to May 2013 (= 6 months) where SnP500 would be lucky to get a single 5% pullback.


    Daytraders and Swing Traders love Sector Rotations. Lots of opportunities for those who wanted to play individual stocks and/or sectors.
    10 Apr 2014, 06:35 PM Reply Like
  • Ashraf Eassa
    , contributor
    Comments (9744) | Send Message
    10 Apr 2014, 06:44 PM Reply Like
  • David Pinsen
    , contributor
    Comments (2335) | Send Message
    Still pretty cheap to hedge QQQ though, despite today's drop:
    10 Apr 2014, 06:58 PM Reply Like
  • C.N
    , contributor
    Comments (263) | Send Message
    nflx earnings on Apr 21
    Lnkd on apr 28
    amzn- apr 21 or 25
    crm on may 19


    no reason to buy these stocks now, you could get whacked when earnings are released.
    10 Apr 2014, 07:33 PM Reply Like
  • Nettligent
    , contributor
    Comments (1346) | Send Message
    Re-evaluate my portfolio and sell most of my stocks. There are so many uncertainties in the market with many gamblers. I would rather manage my risks to protect my portfolio for now: making less is better than losing my shirt.
    10 Apr 2014, 08:19 PM Reply Like
  • Nettligent
    , contributor
    Comments (1346) | Send Message
    Correction in stock market is healthy in a long run. There are many momentum stocks in market.
    More sell-off expected beyond momentum tech and biotech sectors: small cap, media, housing, etc. Time to bring us down to reality.
    10 Apr 2014, 07:38 PM Reply Like
  • leslie mccarver
    , contributor
    Comments (48) | Send Message
    Doesn't this really highlight the difference between traders and long-term investors? Can anybody really say two or three years from now the biotechs will not be higher? With the ability to finally cure many terrible and expensive diseases, I personally believe biotechs are the long hold of the decade. CNBC has certainly been helping in my opinion to talk the market down , lumping momentum and high PE stocks together. I have to think it is because the "kids"on the desk lack real insight, experience and long-term perspective. Where are the replacements for Maria Bartiromo and Larry Kudlow on CNBC these days? The viewing public needs commentators who do not merely read the garbage the producers write and who are qualified to draw conclusions based on fact and experience. Shallow will not cut it these days. At least they still have Michelle Caruso Cabrera and Jim Cramer. We may have to switch to Bloomberg which seems to have much less commentary and more factual presentation.
    10 Apr 2014, 08:10 PM Reply Like
  • Hoang6
    , contributor
    Comments (358) | Send Message
    Best time to buy, many things are on sale!
    10 Apr 2014, 08:31 PM Reply Like
  • wwsaj23
    , contributor
    Comments (2) | Send Message
    This just the beging evry asset class is way high
    10 Apr 2014, 09:59 PM Reply Like
  • buyandhold???
    , contributor
    Comments (907) | Send Message
    so is yahoo expensive trading at only $33B when it has about $60B book value w/


    $35B ali baba stake
    $11B yahoo japan stake
    $3B cash
    $1B+ yen hedge paying it for the next few quarters
    core yahoo business


    no so not all companies are overpriced
    10 Apr 2014, 10:15 PM Reply Like
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