Biotech sticks it to stocks

Cramer's Stop Trading: Celladon
Cramer's Stop Trading: Celladon   

Biotech is getting roughed up, after leading the market's gains this year.

But unlike other selloffs, the wipeout by the high-flying sector spared other momentum names like Tesla or social media stocks, like Twitter or Facebook.

Read MoreWhat's wrong with healthcare and biotech?

The iShares Nasdaq Biotechnology ETF, IBB, tumbled more than 4 percent, as bad news hit a couple of companies in the sector. The IBB, however, is still 15 percent higher year to date and held a low just above its 50-day moving average at 347.77. The larger-cap S&P health-care sector has the led the market year to date, and it was down 1.4 percent. It is up 7 percent for the year.

Celladon led the biotech group's decline with a dramatic 80 percent drop. The company, which went public last year, plunged after its heart failure gene therapy, Mydicar, failed to meet goals in an important study.

Read MoreStocks mostly lower, as biotech lags

Medical injection
Jeffrey Hamilton | Digital Vision | Getty Images

"That's a high-profile move. That could make people concerned," said Steve Massocca of Wedbush Securities. "It's not exactly the cheapest group around. It's got an elevated valuation here. It does nothing but go up. It doesn't take much to create a wobble."

"It doesn't appear to be hurting other speculative areas. The social media index is up three-quarters of a percent," he added, referring to SOCL, the Global X Social Media Index ETF.

Biogen also was rocked, down 3 percent after losses Friday on news that its key oral multiple sclerosis drug, Tecfidera, saw sales fall 10 percent, its first decline ever.

The company posted lower-than-expected earnings and revenue. It said Tecfidera's quarter was "challenging" and affected by a slowdown in the MS market. Biogen also warned that its growth could be lower than expected if sales do not improve.

Amgen also was lower, after FDA staff said an accelerated review of its skin cancer immunotherapy cannot be currently considered. The agency's reviewers said it was unclear whether the treatment, talimogene laherparepvec, improved overall survival. The treatment was to come before a panel of FDA advisors this week.

The decline in biotechs helped turn the broader market lower after early gains.

"I would think it's hard for (biotech) to sustain these levels. We've had an incredible type run," said Michael O'Rourke, chief market strategist at JonesTrading. He said the biotechs may be signaling trouble ahead. "The market has just not stopped. I don't think it's sustainable, but you don't know until it's run its course."

Massocca said the market is ripe for a pullback but if it comes, it should be another shallow correction of 5 percent or less. "I think the market is elevated. It's extended but it's susceptible to bad news. ... The S&P got over 2,120 ... 2,120 was an interesting level. it sort of made a move and failed," he said.

Read MoreThe market 'doube whammy' most investors fear

O'Rourke said the market has been having its weak pockets, and it's biotechs turn. He said the market leadership has been thin. "When you look at the action on Friday, the Nasdaq was up ... 90 percent of that gain was due to Amazon and Microsoft. That strength was mainly two names."

In larger health-care names, Mylan shares fell more than 5 percent after it rejected a $40 billion offer from Teva Pharmaeutical.

—CNBC's Gina Francolla contributed data to this article.