Big momentum stocks flutter as Netflix takes profit

Jin Lee | Bloomberg | Getty Images

At about 10:50 a.m. ET a friend of mine said to me: "What happened to Apple? It just dropped $15 in a few minutes!"

Although we are waiting for news on the new iPads, there was no immediate news that would cause the stock to drop.

Welcome to the now-familiar era of momentum trading.

It likely all started when Netflix (NFLX), which opened up nine percent (at $387.84) and immediately began moving lower...but when it dropped below the previous day's close of $354.99, volume picked up and the momentum traders piled on...within six or seven minutes it went to$337 or so on heavy volume.

Predictably, all the big momentum names started going south, fast. Not just the usual suspects like Linkedin (LNKD) or Facebook (FB), but even Chinese internet names like Baidu (BIDU) and Sina (SINA) headed south fast.

In other words, there is a group of stocks that are heavily traded because they are 1) liquid (heavy volume), and 2) volatile (high beta). These are the characteristics that high-frequency traders, and even just plain old day traders, crave.

But when you can set the computers up to trade instantaneously, this is what you get in a very short period: a crowded, one-sided trade.

The Dow shed 70 points in about 15 minutes.

It's enough to make you nostalgic for specialists and SOES bandits. And if you know what a SOES bandit is, you've been around way too long.

Elsewhere, the early market gains were fueled by a collapse in bond yields around the disappointing September jobs report. Yields on the 10-year went from 2.58 percent to 2.54 immediately (a 3-month low), and to as low as 2.52 percent as the market opened; the dollar index dropped to its lowest level since February, and gold popped to its highest level in a month.

By CNBC's Bob Pisani