Tech Freaks Out

With Comey in the rear-view mirror and the market shrugging off surprising results in the U.K. election, stocks seemed all clear to gain for a third straight session and finish the week in positive territory with all-time highs.

And then the bottom just dropped out of technology due to warnings from Goldman Sachs and Citron Research.

The NASDAQ hit a new record earlier in the day, but then completely crumbled as blockbuster names like Apple, Facebook and Amazon, among others, dropped by more than 3%. The index finished lower by 1.8% to 6207.9. The S&P fought hard to stay in the green, but eventually slipped by 0.08% to 2431.8. The Dow, however, managed to gain 0.42% to 21,272.

Just a few hours earlier, these indices seemed set for weekly gains. By the end though, only the Dow could muster a 0.3% advance for the week. The S&P was down by that same percentage, while the NASDAQ slumped 1.6% thanks to today's epic reversal.

But there are some silver linings to the "tech wreck". First of all, the editors don't feel that this is signaling something fundamentally wrong in tech. Instead, this space has surged this year and it was time to give some back. Secondly, and perhaps more importantly, there are now some impressive tech stocks at much more attractive prices. "I see no reason to run away from the tech stocks in our portfolio," said Steve in RTA. "The value proposition only got better after today's action...not worse."

Today's Portfolio Highlights:

Momentum Trader: Shares of KMG Chemicals KMG plunged on Friday after its quarterly report, so Dave wasted no time in selling it from the portfolio. Despite the drop, the position still brought a nice 14% profit. The editor plans on a flurry of activity next week, including a buy on Monday. He also plans to sell a couple of other companies that are trying his patience.

Large-Cap Trader: The YY, Inc. YY position is now up to a standard allocation after John added another 2% on Friday. The editor took a smaller-than-usual 3% stake in "the Facebook of Mainland China" when first adding it on May 24th, but then added 2% on June 1 with plans to stagger up to a full position. Today it is complete. Learn more in the full writeup.

Income Investor: In addition to being a Zacks Rank #1, Cummins CMI is also part of a space in the top 1% of the Zacks Industry Rank. This engines manufacturer beat on both the top and bottom lines in its first-quarter report, while also raising its guidance for the full year. With an expected EPS growth rate of 12% and a dividend yield of 2.63%, Neena announced yesterday that she would be buying CMI today. Read the full write-up for more.

Insider Trader: "Today's technology squeeze was needed. No trees grow to the sky. Every bull market needs some pullbacks. 

"Will this be a one-day wonder though?

"My bet is that everyone buys the dip on Monday. A one-day sell off isn't a sell off. It's simply a break. Sentiment is still too bullish on the sector." -- Tracey Ryniec

Zacks Counterstrike: "The big question is what happens next. Was this a canary in a coal mine situation? I would say no, because of the rotation into other sectors. However, it must be noted that this was the highest volume we have seen in a month. I have been banging the table on the pathetic volume and if sellers show up, this market will go down fast, as it will be hard to find the liquidity to hold the market up.

"But for now, investors need to be calm and see what happens next week. If we break 2400, there could be a larger pull back in store. But if we follow the trading trend, next week will open up quiet and markets will grind back higher. At this point the signals are not clear on market direction, but the bulls are still in control.

"Take a look at the NVDA chart in comparison to the Nasdaq. Pretty amazing move there. As an active trader, I was glad to see the volatility back." -- Jeremy Mullin

Have a Great Weekend,
Jim Giaquinto