It Was An Ugly Day For Momentum Stocks

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:

We’ll keep an eye out.

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