Net Stocks Rally, but Not With Same Fervor as Tech Sector

A bright technical picture could fuel further gains, but investors will be checking valuations.
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Bye-bye! Or rather, buy-buy!

Correction. What correction? That's ancient history.

James Cramer

wrote about problems the bears were having in an earlier

piece.

TheStreet.com Internet Sector

index was up 22.83, or 2.3%, to 1038.26 in recent trading.

TheStreet.com New Tech 30 was up 20.70, or 3.1%, to 696.98, while the

Nasdaq

was up 104.31, or 2.4%, to 4371.87.

Internet stocks have rallied with gusto, but a bit more cautiously than the rest of their tech brethren. Valuation concerns have finally surfaced, taking their toll on both old and new Internet companies. Expect a little more scrutiny from investors during the upcoming earnings season. Stocks that do not appear to be on track to grow in a fashion justifying valuations will be dealt with swiftly.

One thing working in the tech sector's favor is a much brighter technical picture, which could suggest further gains ahead. Strength of the market since it broke down Tuesday has surprised Elaine Yager, vice president and senior technical analyst at

Herzog Heine Geduld

.

"I don't think there's a great deal of pessimism around. Caution went goodbye. It's done," she said.

Yager said the Nasdaq already breached resistance at 4355 today on an intraday basis, though it still must close above that to challenge further resistance at 4606 on an intraday and closing basis. If that level is breached, retest of the highs from last month is next.

"If there's that much strength around, then that's what the market can do on a long-term basis," she said.

Yager said that the lows reached this past week were "always subject to retest," and that the market will react to upcoming earnings news as it happens. But she saw potential for good things ahead.

"If the market repairs itself at the speed of which it declined, much to my amazement, a summer rally could begin as early as April," she said.

And while things have certainly improved from the standpoint of where the major market indices are now compared to earlier this week, Yager emphasized that investors need to examine each stock in their portfolios and determine whether those are still below trendlines, moving averages and support levels. This will help investors determine if they should continue to hold those stocks.

For TheStreet.com Internet Sector index, Yager said that resistance at 1000 has been successfully breached and additional resistance would be seen at 1150, which was the high from March 30, then 1200.