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No bull! Traders eye valuations, and don't like what they see

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The Nasdaq index is again leading stocks down. Even before the opening bell on Wall Street, S&P Futures were down 0.3 percent, but Nasdaq 100 futures were down 0.7 percent.

In the last week, the Nasdaq Composite is down 1.7 percent, the S&P 500 is down 0.4 percent.

The problem is simple: if we don't have data to confirm that the economy is notably improving, the valuations of many of those technology growth stocks are in question. The S&P is trading at roughly 15 to 16 times forward earnings, but many of the growth names are trading at valuations twice that.

Meanwhile, the going has been rough for some of the sector's bellwethers since March:

Pandora -29 percent

Zynga -28 percent

Netflix -24 percent

Facebook -21 percent

Amazon -15 percent

The bottom line: March's payrolls were respectable, but not enough to support the robust growth the market is looking for. The data is certainly not strong enough to support valuations that are way ahead of the market.

Elsewhere

1) The initial public offering parade keeps marching on, but the boring ones are getting the attention.We are getting into the heart of the IPO avalanche: 16 are slated to price this week, and nine the following week. Behold the following:

La Quinta Holdings (LQ), with a $725 million deal pricing Tuesday for Wednesday trading, is getting most of the attention, but there is a massive IPO pricing the following day from Ally Financial (ALLY), which is seeking to price 95 milion shares from $25-$28. At an estimated $2.5 billion, this will be the biggest offering of the year, if it gets out the door. Remember, this is the old GMAC, General Motors' lending arm. But they have expanded, with a bank, Ally Financial, which is big in the internet and mobile banking business.

So the question is raised again: are IPOs in a bubble? The average traffic going back 34 years is 29.4 pricings per month. In 2014, we are averaging 26.6 pricings per month. So we are below the historic average.

2) The Ukraine seems to be resurfacing as an issue for markets once more, with concern that there is a stealth attempt to take the eastern Ukraine. There is a big ramp-up in what Russia is demanding Kiev pay for gas, which will strangle the country.

3) Michael Lewis and 'The Flash Boys' backlash continues. It's not just that Mr. Lewis wrote a book about high frequency trading and did not include an interview with a single high frequency trader, or anyone at the stock exchanges...or anyone on Wall Street. The only thing Lewis did was give a favorable nod to Goldman Sachs' sudden revelation that it may have issues with market structure (really?).

It's more that this relentless buildup of IEX, the alternative trading system that wants to be an exchange, as the hero of the book. It doesn't quite fit with the idea that they are just a bunch of 'aw-shucks' guys who discovered, by themselves, that the market had structural problems.

Blogger Scott Locklin and others have noted that while IEX may have a good idea for a new exchange, they are hardly babes in the woods. Instead of being backed by Wall Street types like Morgan Stanley and Goldman Sachs, they are being backed by powerful buy-side firms like Pershing Square, Third Point, and Brandes Investment Partners.

The buyside has always despised the sell side, and bitterly complained that they have been ripped off. And as far as I can see, that's been going on for a very long time. They bitterly complained about the NYSE specialists and the NASDAQ market makers when I got here in the mid-1990s. At that time, however, the spread back then was in eighths ($0.125) until 1997, then sixteenths ($0.0625) from 1997 to 2000. Afterward, we drifted down to pennies. Now they complain about the penny, and even the sub-penny, profits.

Correction: An earlier version of this story incorrectly stated the number of IPOs pricing this week.

--By CNBC's Bob Pisani

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S&P 500
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US 10-YR
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NASDAQ
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NASD 100
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PANDORA
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ZYGNA
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NFLX
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FB
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AMZN
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GM
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  • A CNBC reporter since 1990, Bob Pisani covers Wall Street from the floor of the New York Stock Exchange.

Wall Street