No follow-through to a 200-point rally? Are you kidding me?
If there were a day for bulls to get excited about, it should have been today. The
Nasdaq Composite Index
did erase the aformentioned 200-point loss, which should have translated into at least a little follow-through buying today. When it failed to materialize, sellers did and slammed the tech sector yet again.
The Nasdaq closed down 199.66, or 5.9%, at 3164.55, giving up much of the ground in the final hour of trading, when most things seem to happen these days. The drop was devastating from a technical perspective, as the index closed below its 3321 low close of April 14 for the first time, confounding technicians who saw Monday's rebound as suggesting that the worst may have been over for the time being. Now, a trip to at least 3000 and possibly from 2900 to 2600 appears more likely.
TheStreet.com Internet Sector
index ended down 59.57, or 7.3%, at 758.81.
In our last
piece, we asked that if anyone could figure this out to let us know. And sure enough a smart reader came through.
"The brief intraday rallies are episodes of wishful thinking, with people getting burned daily," he wrote. "Market volume is extremely light because institutions don't want to bet that we've reached a bottom and then get burned ... again. The notion that tech stocks are impervious to rate hikes rests on shaky evidence at best. "The only sensible thing to do is hold tech and other growth issues, while buying energy stocks which tend to rise commensurate with interest rates, and value stocks which may benefit from a flight to value. Or reallocate assets out of stocks to a CD offering a guaranteed 8% return."
And we're not sure how to read this last sentence.
"That is what's ahead, so buckle up, baby boy."
Here's another. Thanks again.
"The market is paying for the excesses of the bull market. Days when all one had to do was buy an overpriced stock and wait for some news release or a $1000 price target. Hope all the gamblers and speculators are learning the hard way that it can't be that easy to make money in the stock market."
Losses were steep across all subsectors of Internet stocks. Among traditional Net plays,
ended down 20 3/16, or 14.8%, at 116, though note that it had gained 18 points yesterday without any news.
dropped 4 1/8, or 11.4%, to 36 3/16;
slipped 6 1/2, or 11.5%, to 50 3/16;
fell 5 3/16, or 10%, to 46 11/16; and
slid 16 9/16, or 14%, to 101 1/2.
Other highfliers that were grounded included
, down 5 5/16, or 12%, to 38 3/4;
, down 6 15/16, or 11%, at 53 7/8;
, down 15 3/4, or 15%, at 88; and
, down 4 13/16, or 11%, at 38 7/16.