The Internet sector was in full rally mode until it saw the
pushing toward a 400-point loss and below the 10,000 level again. And while the Nasdaq briefly traded above 5000, it closed lower, and Internet stocks followed.
TheStreet.com Internet Sector
index finished down 3.44, or 0.3%, at 1249.30, after trading to an all-time high of 1288.59. The Nasdaq reached a high of 5006.78, but settled down 57.01, or 1.2%, at 4847.84.
The Dow closed down 374.47 at 9796.03. A profit warning from
Procter & Gamble
and a continued ride in crude oil prices weighed on the Dow.
The late downturn in tech issues couldn't erase the progress in
buy the domain registrar for $21 billion in stock. Network Solutions closed up 46 25/32, or 13%, at 407 13/32, though VeriSign tumbled 47 7/16, or 19%, to 200.
Elaine Yager, senior technical analyst and vice president with
Herzog Heine Geduld
that now's the time for investors to re-examine their portfolios and determine whether they want to book some profits in certain stocks.
"The first and foremost thing you must realize is that the market will rid itself of its own excesses," she said. "It doesn't need help from the government or other agencies. So if you're sitting there and you're feeling very comfortable about being profitable, don't take it for granted. I cannot reiterate this enough."
Yager said that the March/May period is the second ugliest time of year for the stock market (September/October being first), and at least two-thirds of the market is in a near-term bearish trend.
Yager's recommendation to investors is to look at their stocks on an individual basis, and that it may be time to take profits if the stocks have had a key reversal day. This is a relatively simple concept when a stock reaches an all-time high but closes lower. It is exactly what the Nasdaq did today, when it reached an all-time high of 5006.78, but closed lower.
There's always a qualifier, and here it is. Yager said that many stocks are trending up and can trade lower near-term, but still remain in an uptrend. And she used the Nasdaq as an example. She said that today's high was not much above yesterday's high of 4980, so it was only a marginal reversal.
Yager said she would not get overly concerned until the Nasdaq fell below its low of 4466 on Feb. 28, though there was still good support at 4291, which was the low on Feb. 22 and Feb. 15. She said that if stocks fall into the key reversal pattern, taking profits now may be a good call, and if you like the stock, get back in at a lower level.
On the flip side, she said that markets do not have to go straight down, and the Dow and S&P 500, and even the Nasdaq may be oversold on a short-term basis, so a trading bounce was possible.