Momentum Stocks Are Getting Bludgeoned Again

The S&P 500 is down a modest 4 points, or around 0.2%.

But that belies the bludgeoning of the high-beta / momentum / growth stocks. This is better represented by the Nasdaq, which is down by 0.9%."

Leading the way down are the biotech stocks again. The iShares Biotechnology Index (IBB) is down 3%.

"All I'll say is that you'd think investors would've learned from the Tech bubble and housing bubble, but I guess they were just dying to touch the hot stove once again. now they're getting burned," said Rich Bernstein in a recent email to Business Insider.

Other big losers:

• First Solar is down 3.2%.
• Facebook is down 3.1%.
• Amazon is down 3.1%.
• priceline.com is down 3.0%.
• Netflix is down 2.8%.

The good news for diversified investors is that the whole stock market isn't selling off.

Market strategist Ed Yardeni has characterized this as an "internal correction," with investors moving from smaller momentum stocks to more stable large-cap stocks.

In this environment, Deutsche Bank's David Bianco recommends over-weighting mega-cap Tech and Banks.

"Investor confidence in the likelihood of the much stronger growth needed to support valuations, especially at small caps and S&P 500 non mega-caps, is fading," said Bianco. "But this view is being replaced by the view that long-term interest rates stay well below historical norms for a long time. Thus, investors are shifting to larger and more mature businesses whose generally steady-state PEs should benefit from a lower cost of capital than used historically."