The Market Still Has a Two-Track Mind

 | Apr 03, 2014 | 6:52 PM EDT  | Comments
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Stock quotes in this article:

stx

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mu

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ibm

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hpq

They wouldn't stop the selling right into the close. They wouldn't stop, even with the S&P 500 rallying. It was just a different market over at the Nazz entirely and, again, I have to warn you that this kind of two-tracked behavior, when it involves as many stocks as it does, is just toxic for most stock market managers.

That's because most managers have a smattering of these stocks. They had been too good and created too much outperformance to ignore.

What's amazing to me is that there seems to be no short base whatsoever. It's like the whole ride up this year has been done on the backs of the shorts, and now that they have been broken, it is just free fall.

At one point I was entertaining the notion with Stephanie Link, my co-portfolio manager for Action Alerts PLUS, that perhaps we should just stick a bid in for one of these beaten-down stocks. But -- and this is probably a sign of a short-term bottom -- we figured we should wait until tomorrow. We wanted to wait, because I think the rush to beat it out the door of these stocks wasn't just by the insiders today. It was also by people who want out because they fear a stronger economy and the need to pile into Seagate Technology (STX), Micron (MU), IBM (IBM) and Hewlett-Packard (HPQ). The employment number became central to these stocks for most of the day.

When you see stocks wilt like they did today, though, remember that there are a ton of people who never knew what they did anyway. A ton who have no idea what software-as-a-service is, let along how they are now losing gobs of money in them.

They say time heals all wounds. When it comes to the stock market, though, I would say "time and price" heals some wounds, and others just don't seem to heal at all.

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