After Early Pop, Net Sector Drops

Investors were asking themselves today the same questions they were asking last week. Does the early bounce signal that the worst is over? Is it another opportunity to get out of some issues they couldn't get out of yesterday? Is it time to short tech? Results were mixed early on, but it soon became apparent that most were selling into the early rally.

The

Nasdaq

was down 152.64, or 3.6%, at 4071.04 in recent trading, having already traded on both sides of unchanged. It had reached a high of 4283.45 early in the session.

TheStreet.com Internet Sector

index was down 48.77, or 4.9%, at 949.64, after having traded as high as 1014.32.

TheStreet.com New Tech 30 was down 33.08, or 5.1%, at 613.96.

Yesterday's huge slide left the Nasdaq roughly 18% off its highs, a sizable correction in a short period of time, which suggests that the market was oversold and due for a technical bounce. Levels that could still be tested on the downside would be psychological support at 4000 and 3900, which is roughly a 50% retracement of the Nasdaq's move from last October to March's highs.

As for fundamentalists, market analysts were attempting to support a battered and beaten sector.

Goldman Sachs

analysts wrote today that the Internet market weakness was overdone and reiterated overweighting the sector.

"In general, we view the weakness in technology and Internet areas as normal and healthy profit-taking with the strong gains over the past few months, and again reiterate our emphasis on a long-term approach to investing in 'best of breed' Internet companies," they wrote. Among the companies that they recommended for long-term investors were traditional bellwethers

America Online

(AOL)

,

Yahoo!

(YHOO)

,

eBay

(EBAY) - Get Free Report

,

RealNetworks

(RNWK) - Get Free Report

and

Inktomi

(INKT)

.

In recent trading, AOL was down 2 15/16, or 4%, at 63 9/16; Yahoo!, which reports earnings after tomorrow's close, was down 1 5/16, or 0.8%, at 158 13/16; eBay was up 6 13/16, or 5%, at 150 1/16; Inktomi was down 23 3/16, or 14%, at 144 1/4; and RealNetworks was up 3/8, or 0.7%, at 51 13/16.

Among other companies in the news,

Ariba

(ARBA)

was up 9/16, or 0.6%, at 89 1/4 on a couple of items. The company said that it would post second-quarter revenue of between $36 million and $38 million, which the company said beat consensus estimates by 25% to 30%. Chip Wittmann, CFA with

First Union Securities

, told

TSC

that he had expected revenue of $25 million for the quarter. The company attributed the solid revenue outlook to B2B platform demand.

In addition to the above news,

Bank of America

(BAC) - Get Free Report

said today that Ariba technology would power its business-to-business e-commerce. Bank of America also will offer this financial services engine to independent market makers or large corporations that want to integrate e-banking services with their own procurement platforms.

In analysts' action,

Robinson-Humphrey

initiated coverage on a number of B2B plays. Analyst William Chappel initiated coverage of

Kana Communications

undefined

,

E.piphany

undefined

,

Exchange Applications

(EXAP)

and

Pivotal

(PVTL) - Get Free Report

with outperform ratings and

Vignette

(VIGN)

with a buy rating.

In recent trading, Vignette was up 2 3/32, or 2%, at 125 1/8; Kana was down 6 1/4, or 12%, at 47 3/4; E.piphany was down 4 13/16, or 5%, at 94 1/4; Exchange Applications was up 3/16, or 0.4%, at 43 1/2; and Pivotal was down 1/8, or 0.4%, at 33. Chappel told

TheStreet.com

that short-term traders should "tread lightly" if they were thinking of investing in the B2B space, while the recent pullback has presented "a very attractive entry point" for long-term investors.

"As companies transform themselves from businesses to e-businesses they're going to need these e-commerce and e-customer relationship management applications," Chappel said.

What are you doing?

Shorting tech.

Buying B2Bs.

Buying bellwethers.

Still waiting for buying opportunity.

Lost all my money. I'm done.