Did You Notice This Bear Market?

The S&P 500 and the narrower Dow Jones Industrial Average (DJINDICES: ^DJI  )  were down 0.10% and 0.17%, respectively as of 10:15 a.m. EDT Monday. Investors today will be paying particular attention to technology stocks and momentum favorites, which were hard hit on Friday (the Nasdaq Composite lost 2.6%).

Friday's sell-off in technology shares was not unprecedented and appears to be part of a broad, ongoing reassessment of high-flying issues. Among the sectors paying the highest price is biotechnology -- the Nasdaq Biotechnology Index dropped 4.1% on Friday and is down more than 17% from its Feb. 25 high. However, the correction isn't contained there, with 44% of the stocks in the Nasdaq Composite  (NASDAQINDEX: ^IXIC  )  at least 20% below their 52-week high as of Friday's close.

Granted, many of them are small-cap names you've never heard of, but some are familiar names such as Facebook and NetflixTesla Motors, meanwhile, is barely above the cutoff. Not surprisingly, those three names were among the best-performing stocks in 2013 (in fact, Tesla Motors remains one of the best-performing stocks year to date), hitting valuations that have had value-tethered investors (such as myself) shaking their heads in disbelief. I have no problem with venture capital-style, aim-for-the-bleachers investing, as long as investors understand that, for any specific name, it is closer to speculating than investing. (If this is not clear, please refer to Ben Graham's definition of an "investment operation.") The current correction suggests that momentum "investors" are withdrawing from these names; that fundamental investors are becoming more realistic in their assessment of the risks involved; or, more likely, a combination of both of these -- this is a healthy development.

In terms of macroeconomic news, investors and pundits are looking forward to the release Wednesday of the minutes from the Federal Reserve's March meeting. The market was initially spooked by what it perceived to be Janet Yellen's hawkish tone at her first press conference as Fed chief last month, but she has since made an effort to convince investors that the central bank is committed to providing monetary stimulus to support the recovery. Finally, the first-quarter earnings season gets under way this week, with banks JPMorgan Chase and Wells Fargo reporting results on Friday.

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