Buy or sell? Bargain-hunter or profit-taker? That's the dilemma traders are facing with Internet stocks in the past two days following the tremendous run-up in the past three months.
TheStreet.com Internet Sector
index closed down 2.53, or 0.2%, at 1094.90 after trading as low as 1058.68. A recovery in the broader technology sector aided Net stocks. (Note that the DOT held support above the Dec. 9 low of 1052 that we
And the sector will likely get a boost tomorrow morning following a stellar quarterly report from Net heavyweight
. The Internet incubator reported a loss of $1.08 for its fiscal first quarter, much better than the
First Call/Thomson Financial
estimate for a $1.76 loss. It had reported a 42-cent gain in last year's first quarter. But just as important in this day and age, the company said it would split its stock 2 for 1. After closing down 6, or 3%, at 199 3/4 CMGI was trading around 220 in after-hours markets.
Whether CMGI's numbers can stem the tide in the sector will be determined tomorrow. A technology specialist at a major brokerage house said he saw traces of investors buying some of the bigger names in the Net sector like
when the market set back.
Yahoo! closed down 5 5/8, or 2%, at 327 1/2 after trading as low as 315 1/2. eBay finished down 4 3/4, or 3%, at 145 13/16 as profit-takers slammed the stock after it pushed as high as 159 15/16 following a positive note from
. Amazon closed up 7/8, or 1%, at 96 1/2 after trading as low as 91.
The specialist said he was unsure how long the selling might last, but he expected money managers to step in near year-end to do some window dressing. He also expected tech and the Net sector to get a boost before fourth-quarter earnings are reported next month.
"Once this dust settles, people are going to come back and they're going to be buying Internet," he said. "I don't know if it's going to be a couple-day thing or something longer."
Elaine Yager, vice president and senior technical analyst with
Herzog Heine Geduld
, said bias in the technology sector was still up, though the tech-laden indices have had a loss of momentum. With regards to the
Nasdaq Composite Index
, Yager said that the Nasdaq has so far held support above 3452.70, which was the high from Dec. 2. She said traders may be looking to fill the gap from 3452.70 to the Dec. 3 low of 3507.30, and if that level holds and the index trades higher, it could indicate a good area of support.
Below 3452.70, she said a one-third correction from the Oct. 18 low of 2632 to the all-time high of 3669.90 from yesterday comes in at 3323.90, or almost exactly at the Dec. 1 low of 3321.50, which would be the next support level.
With regards to TheStreet Internet Sector index, Yager said she would be concerned if on Friday it "closes smartly below" last week's low of 1017.92.