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A Day for Tough Tech Decisions

Wild swings in the sector leave investors wondering whether to stay the course or bail out.

Stay the course or bail out? It's a question many investors must be thinking after watching the wild swings the technology sector has gone through Thursday and over the past few weeks.

In recent trading, the

Nasdaq

was down 115.70, or 2.5%, at 4528.97. It dropped as low as 4538.10 on the opening, bounced back into positive territory for about 10 minutes, but resumed its trip back down after investors took advantage of the spike to bail out of positions.

That 10% correction nonsense that we ripped on Wednesday sure was playing a role Thursday. At its lows, the Nasdaq was down roughly 10% from its March 24 intraday high of 5078.80.

TheStreet.com Internet Sector

index was down 13.62, or 1.2%, at 1110.46, but had traded in a range between 1094.42 and 1150.11.

TheStreet.com New Tech 30 was down 18.24, or 2.4%, at 738.17.

Wednesday, we

noted that technical factors suggested losses could persist and the Nasdaq could be headed toward 4000, or another 500 points lower.

Barry Hyman, senior market analyst with

Ehrenkrantz King Nussbaum

, said that if support between 4400 and 4500 doesn't hold, he also sees 4000 in the Nasdaq. He said he expected the selling to persist for the next three to five sessions, but that the sector would be saved by investors anticipating strong first-quarter results. While the market had gone a long way toward pricing in good results, Hyman said they were no longer priced in after the latest setback.

Hyman said a number of factors have changed with this decline in tech. First, investors who bought on the dip from earlier in the month have not been rewarded as they had been on most previous declines over the past six months -- therefore some of the market psychology changes.

More importantly, Hyman said, there is a valuation standard in the marketplace that previously was not as much of a concern. He recommends that investors concentrate on large-cap stocks "that Wall Street continues to like," and ones that make money. Among the stocks he said were on his "radar screen" were

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.

Hyman said he was not concentrating on other "tertiary" stocks that may have run up with the rest of the sector but may not have the fundamentals to back up the gains. "They'll go up again," he said, "but there's more risk than there has been in the last year or two."

His advice for individual investors? Examine your portfolio and see if you have too much weighting in an individual stock or sector. "And don't be afraid to take profits and pay the tax," he said.

Also, he said, investors have opportunities outside of technology that will make money. "But don't expect 50% returns in other sectors; they don't have a Nasdaq profile," he cautioned.

Longer term, he said technology will remain the growth sector, though he again stressed that the valuation standard was in play now.