It was an ugly start to the week for momentum stocks.
In trading action that was somewhat reminiscent of what we saw in March and April, internet-based momentum stocks and biotechnology companies, were among the worst performers during today’s session.
The indexes that house a lot of these companies, the Nasdaq and the Russell 2000, also lagged the S&P 500, with the Nasdaq losing 0.77% and the Russell 2000 falling 1.77%. The Dow and S&P 500 lost 0.26% and 0.39%, respectively.
Shares of companies like Pandora, down 5.8%, FireEye, down 6%, and Zulily, down 6.3%, were among the internet-based companies that fell sharply today. None of the companies had any obvious piece of news associated with the tumble.
Biotechnology stocks, including GW Pharmaceuticals, down 6.8%, Isis Pharmaceuticals, down 6.7%, and Alnylam Pharmaceuticals, down 6.5%, were also lower on no obvious news.
The iShares Nasdaq Biotechnology Index, an exchange-traded fund that trades under the ticker ‘IBB’ and seeks to match the Nasdaq Biotechnology Index, fell 2.6%.
Recall that from the beginning of March through the end of April, some of these stocks fell more than 50%, while the IBB fell nearly 13% and the Nasdaq lost 4.5%.
In April, we chronicled the troubles of pseudonymous trader The Fly, who blogs at iBankCoin and is on Twitter at @The_Real_Fly. Following today’s trade, The Fly, who said he is bullish on stocks until late August when he believes the market will top out, had a less than encouraging tweet for investors in these high-flying names:
Tough day for the home gamers. I’d be slow to get back into high beta stocks if in cash. If not in cash, I’d raise some and have.
— The_Real_Fly (@The_Real_Fly) July 7, 2014
We’ll keep an eye out.