Is the Music Over?

An anti-tech beat has investors on the retreat. But one prominent bull says it's not the last dance.
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SAN FRANCISCO -- Stop. Hammer time.

Reports of technology stocks' demise have been greatly exaggerated in the past, but investors seem now to be adhering to the "can't touch this" mantra when it comes to the sector.

The

Nasdaq

fell 187 to 4457.89

Thursday, recovering more than 100 points from its intraday worst, but still closing 11.7% below its all-time high of 5048.62. More important than sliding into "correction" territory, the index is now below its 50-day moving average of around 4542.

"We have all been spoiled by the spectacular gains we've achieved over the past five months in particular, and the last five years in general," Charles Payne, president and chief analyst at

Wall Street Strategies

, wrote in an email to clients Thursday. "However, it is time to adjust our expectations. Realize the blistering runs will be fewer and farther between. Learning to protect your profits is the key."

I've always found Payne to be an excellent barometer of the aggressive, daytrading-type investors who are his clients, so I don't take those comments lightly. Meanwhile,

something

must have changed because I don't recall

CNBC

ever "suspending commercials," as it did Thursday, no matter how dicey the market got.

That the Comp clawed back above 4455 -- the intraday low hit March 16 -- cheered some market watchers (and its cheerleaders). But many Wall Street types report a sense of "gloominess" and "edginess" about where things go from here.

"There's caution in the wind," said one trader. "People are afraid to make the first move. No one has a clue where we're going."

One person who's had a clue in recent years is Joe Battipaglia, chairman of investment policy at

Gruntal

.

As you might expect, Battipaglia was largely unfazed by the selloff Thursday. Paradoxically, the fact the action in the over-the-counter market was so "indiscriminate" suggests the selling is "not sustainable," the strategist argued. "This is not some reaction to some event that says the world is changing for the worse. We've had a market that has had a tinge of momentum. That works on either side of positive or negative."

Furthermore, Battipaglia noted that for all the noise about the Nasdaq,

Dow

and

S&P 500

, the "aggregate value of equities has moved sideways this year." Indeed, the

Wilshire 5000 Total Market Index

is up just 2.3% year to date.

Thus, the

Federal Reserve

is in a position to "sit back and watch, on the theory that what they did last year is starting to have an effect," he said. Battipaglia expects the Fed to hike at its May 16 meeting (as is widely believed) but then take a more passive stance (which is the subject of more contention).

Perhaps the Fed will take the summer off and provide salvation to a market that could use some "good" news from somewhere (anywhere). But didn't bullish strategists such as Battipaglia have a responsibility to warn investors of the downside risks during the "up" phase of the momentum?

Contrasting himself to fellow gurus (perceived or otherwise) such as

Goldman Sachs'

Abby Joseph Cohen and

Prudential's

Ralph Acampora, who focus on the averages, Battipaglia believes "the indices will take care of themselves; it's the stocks you own that make the difference."

Battipaglia's portfolio is up for the year, and he expects additional gains, noting stocks he owns such as

Intel

(INTC) - Get Report

,

IBM

(IBM) - Get Report

and

Johnson & Johnson

(JNJ) - Get Report

"are not at price levels where I would sell them."

But Intel, IBM and J&J aren't exactly "highfliers," I noticed with my keen sense of the obvious. What about those?

"As I have said before, I think Internet stocks -- which I don't play typically -- even if they corrected massively, will not take the market down in a structural way," he replied. The Comp nearly set a new high last week even though the biotechs were in the midst of a "massive correction," he noted. That's because "the market value of those companies is minor," he said. "If you owned them, it's major. But I didn't tell you to buy them."

At least there's one Wall Street player who won't have any trouble sleeping tonight.

In the Trenches

Another TaskMaster favorite -- Anthony Cecin, manager of Nasdaq trading at

U.S. Bancorp Piper Jaffray

-- offered a different perspective on the action but a similarly sanguine conclusion.

"I'd hardly call what's going on a disaster or a panic," Cecin said. "We're in markets that, by their nature, are going to be much more volatile than they've historically ever been. Participants have to get used to that -- not comfortable

with it, but used to it, because that's the way I see the markets going for the foreseeable future."

At the end of the quarter, comments from Abby Cohen and

Mark Mobius, as well as the

developments at

Tiger Management

, created a "confluence of events" this week that caused the market to sell off, Cecin said.

But the Nasdaq is still up 9.5% year to date, and with the amount of money still flowing into equity funds, it's possible "we might have seen the intraday lows," the trader said. Regardless, "I'm not seeing evidence you've got to throw in the towel here."

I know that does you little or no good if you bought stocks such as

Vignette

(VIGN)

,

Ventro

(VNTR) - Get Report

or

Emulex

(EMLX)

at their respective heights.

But here's another piece of evidence: The Comp is still about 33%

above

its 200-day moving average of 3347.

To some, that says the index is still in an extremely bullish mode. To others, it suggests the Comp still has a long way to go down.

To me, it says it's not too late to diversify, take profits and/or examine closely what it is you're invested in, and why. In other words, to do the things that seemed so passe way back when, in the "glory" days. (Earlier this month, that is.)

Postscript

This weekend, I'll be making my (hopefully) triumphant return to "TheStreet.com" on cable TV's

Fox News Channel

, so please tune in. The show airs Saturdays at 10 a.m. and 6 p.m. EST, and Sundays at 10 a.m. EST. If you're not already watching, you now have added incentive.

Aaron L. Task writes daily for TheStreet.com. In keeping with TSC's editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet.com. He also doesn't invest in hedge funds or other private investment partnerships. He welcomes your feedback at

taskmaster@thestreet.com.