Net Stocks Rocket Higher, but Not All Are Convinced Rout Is Over

Author:: David Shabelman
Publish date:: May 30, 2000 5:25 PM EDT

Buyer beware? Or buy now, the worst is over?

There was cautious optimism on Wall Street after the technology sector bounced back with its usual vengeance. The

Nasdaq

scrambled back with a gain of 227.23 points, or 7.1%, at 3432.34.

TheStreet.com Internet Sector

index, or DOT, meanwhile, climbed 64.13, or 8.5%, to 816.36.

Sensing there were bargains out there, buyers stepped up to the plate after seeing the Nasdaq get pummeled over the past couple of weeks. There was no clue that the buying was on the way, but once it began, it steamrolled along. Month-end positioning likely contributed to the rout. The buying forced shorts to cover positions, extending the move. Some market participants wrote off the gains as a normal bounce from an oversold condition and not indicative of a prolonged rally. Indeed, the market faces some key data later this week with the

National Association of Purchasing Manager's

report on Thursday and the

employment report

for May on Friday.

And there has been similar price action recently that turned out to be not so meaningful. On May 22, the Nasdaq climbed around 218 points from its session lows, but could not follow through on that move, and ended up dropping around 200 points the next day. But technical indicators improved today and may provide some protection against the downside tomorrow. The Nasdaq was able to close above the high close from last week at 3364 and the weekly high around 3391.

Virtually all Net stocks ended strong. Among traditional plays,

Amazon.com

(AMZN) - Get Report

closed up 5 1/4, or 11%, at 51 3/4;

priceline.com

(PCLN)

closed up 3 1/8, or 9%, to 39 1/4;

RealNetworks

(RNWK) - Get Report

ended up 5 3/16, or 16%, at 38 3/16;

CNet

(CNET) - Get Report

drove up 2 5/8, or 10%, to 30; and

Inktomi

(INKT)

added 16 5/16, or 16%, at 118.

And many of stocks that were once sector favorites, but have fallen on hard times of late, were once again the darlings. Among those were a number of business-to-business plays.

i2 Technologies

(ITWO)

closed up 10 7/16, or 11%, at 105 15/16;

Aspect Development

(ASDV)

finished up 5 15/16, or 11%, at 58 1/16;

E.piphany

(EPNY)

ended up 12 29/32, or 21%, at 74 13/16;

Kana Communications

(KANA)

added 5 11/16, or 14%, to 45 11/16; and