We've said it on numerous occasions: Those who buy on weakness in technology issues have been continually rewarded. Whether things have now gotten weak enough remains open for debate, but technology stocks bounced back today after a day and a half of heavy selling, a recovery that was due in large part to a recuperation in the broader market.
TheStreet.com Internet Sector
index closed down 11.68, or 1.1%, at 1084.94. The DOT traded as low as 1060.90 early in the session, tested and basically matched the low in the afternoon when it traded to 1060.84, but held that level and bounced back from there.
TheStreet.com New Tech 30 index finished up 0.52, or 0.1%, at 723.86.
Barry Hyman, senior market analyst with
Ehrenkrantz King Nussbaum
, said a recovery in the blue-chips due to interest rates backing off aided the tech sector, though he said the
could still see a more significant correction. After all, the Nasdaq has only dropped about 6% from its highs, and even a 10% correction, seen as the standard definition of a correction, would not be a huge deal considering how far the index has gone.
"It's nothing disastrous," Hyman said about the time that the Nasdaq turned. "I don't look for a significant decline in the Nasdaq unless the
goes below 9800."
And while he saw potential for more downside, Hyman said he was "nibbling" on some issues he was fond of that have dropped back in the past couple of sessions, including a couple of Internet stocks. "I'd rather buy them before they get up, then be at the end of the line," he said.
Hyman said he had "his eyes" on
, which has been battered since announcing its merger with
. AOL closed down 3, or 6%, at 48 1/4 today. Hyman said that
was somewhat attractive after seeing its first pullback in some time. Today, it closed down 1 7/8, or 2%, at 123 15/16. It traded as high as 136 1/4 on Feb. 10.
Hyman said he also was dabbling in
to be an "interesting" play as the stock has gotten hit since it merged with
. Intel finished up 1 3/8, or 1%, at 106 3/4. EarthLink closed up 1 15/16, or 10%, at 21 3/4 today on news that
had increased its stake in the company to 14.6%.
But Hyman said it was premature to get overly aggressive. He said the tech sector and Internet stocks were in a period after earnings that is traditionally slow, and that it still may take a few weeks for everything to shake out and the sector to bounce back. When it does, he expects the biotech sector to be the first to turn, with Internet stocks following. But he is focused more on business-to-business plays and backbone stocks, and said he will avoid e-commerce "at all costs."
Some other Internet stocks Hyman is taking positions in are
Internet Capital Group
. Ariba ended the day up 5 1/4, or 2%, at 234 1/4, while Internet Capital finished down 2 7/16, or 2%, at 112 1/16.