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Wary Investors Watch Nasdaq Rally From the Sidelines:

NEW YORK (TheStreet) -- Positive momentum returned to the markets midday Tuesday as the major indices edged higher and the beaten down Nasdaq climbed nearly a percent. But many investors on eyed the action from the sidelines. They worried that the rebound in high growth names wouldn't last and that the markets were due for a greater correction. Sentiment on the exchange traded funds that track the S&P 500 (SPY) and Nasdaq (QQQ) remained majority negative.

$SPY $study $qqq... another bull trap just like last time?

- _flipper_ (@_flipper_) Apr. 8 at 12:43 PM

$SPY This weeks feature presentation: dip buyers remorse $IWM $QQQ $DIA

- Andrew C (@Andrew_C) Apr. 8 at 11:53 AM

The biggest beneficiaries of the market gains were battered high growth technology stocks such as Yelp (YELP), LinkedIn (LNKD), and FireEye (FEYE). All three climbed about five percent or more by noon, though Yelp lost some of those gains by 1 p.m. Each had lost more than 20% in the past month as investors shed high multiple, high-risk names for the relative safety of established, large cap companies.

The March selloff took many by surprise. Underlying US economic data had long been lackluster and little in March seemed bad enough to warrant the sudden flight to safety. March unemployment remained at 6.7%. The economy added 192,000 jobs, just shy of consensus estimates.

Some blamed the biotech sector for starting the sell-off. After watching companies with promising but yet unapproved drugs and little revenue gain double digits in single days, many investors started to fear that the five-year bull market had become overheated. Others blamed Barron's. The influential investing magazine argued that the global advertising market isn't big enough to support the multi-billion valuations of all the tech high-fliers.

Yesterday, ZenithOptimedia, a unit of ad giant Publicis, released its global advertising estimates. It expects advertising to grow 5.5% to $537 billion this year. Internet search, classified and display advertising will make up about $121 billion of that total. Mobile advertising, they estimate, will grow 6X faster than desktop internet advertising.

That estimated growth isn't exactly bearish for companies like Facebook (FB), which now takes a majority of revenue from mobile ads and is seeking to gain share from other companies. However, it does spook investors betting on double-digit revenue growth from a slew of social networking companies. Some cashtaggers wondered if the bullish momentum in Facebook and others was broken after the march sell-off. They debated whether they should sell strength in anticipation of a pull back.

$FB Has the mindset changed to Sell the Rally from Buy the Dip. Time will tell.

- SonOf AGun (@SonOfAGun) Apr. 8 at 12:06 PM

Other investors worried that there was little reason for sentiment to have changed, indicating that Tuesday's gains could easily become tomorrow's losses. They said they would wait to see whether the correction had truly ceased.

This second run-up in $QQQ lacks volume...If pulls back, could serve as Double Top. $FB $YELP

- Syntec Ventures (@SyntecVentures) Apr. 8 at 12:32 PM

At the time of publication the author had no position in any of the stocks mentioned.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

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Chart of I:DJI
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