NEW YORK, MARCH 19: The stock market was so crazy last week that investors may be asking themselves,"Whassup?!" First, technology-company stocks went from stars to chumps in just days. The tech-dominated Nasdaq Composite Index, which smashed through the 5000 mark on March 9, suffered three straight days of triple-digit point declines that ripped more than 9% from its value.Then, it was the blue chips' turn to spin investors' heads. The 30 stocks in the Dow Jones Industrial Average, mostly non tech stalwarts such as Procter & Gamble and Coca-Cola, had been badly underperforming the soaring tech sector. But out of nowhere, like a bear awaking from its winter slumber, the industrial average last week suddenly roared to its fourth-biggest and then biggest-ever point gains - adding 8% to the index on Wednesday and Thursday alone.For the week, the industrial average rose 666.41 points, or 6.7%, to 10595.23, while the Nasdaq fell 250.49, or nearly 5%, to 4798.13. But, appropriately in this baffling stock market, the industrials are the laggards for the year so far (down 7.8%) and the Nasdaq is still leading the race (up 17.9%).So what should investors make of it all? Is the tech-stock boom over? Are blue chips back in Wall Street's good graces for good?One thing is clear: The US stock market has been experiencing some of its most vicious "market rotations" in recent years. Thanks partly to online trading and other computer-assisted trading strategies, investors' latest leanings toward the stock market are transferring into rapid shifts in buying and selling, involving billions of dollars in trades from minute to minute.Last week, all the chaos happened simply because investors - both big and small - decided that the so-called new economy stocks (in other words, tech stocks on Nasdaq) had become too pricey and the old economy stocks (the Dow) too cheap to ignore.For two days, the buying-and-selling patterns of investors completely switched. Small investors shouldn't panic when they see the triple-digit point moves. In the end, the Nasdaq composite has had a good year so far, after all, and the performance comes on top of its historic 86% gain for all of 1999. Mutual fund investors in funds that invest in tech, or "growth" stocks or initial public stock offerings are generally sitting on gains of 40% or more this year.As for the blue chips, the huge rally on the two days last week couldn't erase the industrial average's year-to-date decline. But the snapback gave Wall Street confidence that perhaps the drubbing in old economy stocks like Coke and Alcoa might be over. No one knows for sure. Having a diversified portfolio seems to make more sense than ever.Another lesson from last week's turmoil is that it takes only a small amount of news for the stock market to go barreling one way or another. That's because it's a nervous time for Wall Street now that the Nasdaq is coming off a record high and so many tech stocks are trading at nosebleed valuations. Everyone, even the bulls, seem braced for a pullback. (WSJ)
