Hey, what's happening here? What's breaking up the party? What's made it so that the high-octane names are now taking gas instead of burning it? Is it really a rotation? Do I suddenly have to sell my

Red Hots

(renamed

TheStreet.com New Tech 30) that trade in 10-point increments and buy the stocks that move in quarter-points? Is it time to get long

Warren Buffett

and short the

Janus

funds and the

Fidelity

tech funds?

First, I am not going to pretend to know the answer to that. I can't because I must have spent 10 hours yesterday going over that very issue with

Jeff Berkowitz

,

Todd Harrison

and

Matt "Where's the Rest of Me?" Jacobs

. I know we sold some to finance others, which is why I penned the

Palm

(PALM)

piece. These were brutal sales but, as Moltke, the great German military thinker tells us, "He who defends everything defends nothing."

If you haven't done that, you will probably do it today. Just a prediction, but it's what happens. (My wife called it "circling the wagons" when she was here, for those who are more American frontier buffs than students of Germany in the latter half of the 19th century.)

Second, because in many ways that question is unknowable. Unlike traditional stocks, which tend to sell at premium or discounted levels to the markets, the Baby Billions never became measured by traditional measurements. They went up when they were recommended and they went up again when they beat the Street estimates. They went down when they missed the estimates, when they did big secondaries or when they failed to raise the bar.

That's a nebulous set of criteria that makes a Red Hot hard to judge. When you throw in that these are billion-dollar stocks selling at hundreds of dollars a share instead of multi-million dollar stocks selling at 14 or 15, it gets even tougher.

But I can at least

explain

to you why what is happening is happening, and maybe we can reach some conclusions together about what might bring it to an end.

Let's understand that this selloff in the Red Hots is not because of

President Clinton's

biotech speech. In fact, I could argue that such a negative reading of the speech was totally off base. But that's water over the dam at this point. (Yes, and we have not done the biotech rotisserie league draft because I was unwilling to start a league where my belief was we would all be down 50% from the day we started it. So far that's pretty prescient and I am not changing my mind just yet. I know that even though when we did the

B2B I urged people to do their own homework, lots of you piled in. If we had done the same two weeks ago in biotech you would have been slaughtered.)

This selloff came because we all got too cocky at

Nasdaq 5000

and we got there on fumes rather than on real buying. Fumes is margin. Real buying is cash. If you don't think we did it on margin, go read

Tom Lepri's

TheStreet Recommends

piece on

TSC

. My disdain for margin is well known in these pages, by the way. I only use it when the market has been down and can be coiled like a spring back up, not in the Nasdaq stratosphere. I say that because I am all about taking control of your own financial destiny and by using margin you are putting that destiny in the hands of the margin butcher, the clerk who has caused these horrendous last-hour declines these last three days.

The selloff accelerated because of all of the new supply coming on. We are in a supply-and-demand driven market. The underwriters and secondary sellers at last created enough supply to sate the demand for Red Hots. Getting back into balance while the margin clerks are creating massive supply by selling people out is never easy and can't be done in a day.

The selloff roared into high gear when

VeriSign

(VRSN) - Get Report

and

E.piphany

(EPNY)

launched giant takeover bids that issued massive amounts of stock into a market that didn't need it. No matter that on paper these seemed like

Cisco

(CSCO) - Get Report

-to-buy-

Cerent

, meaning really smart acquisitions; the sheer audacity of these managers to use their market caps as a way to overpay to get the next best technology was ruinous to the psychology.

And now the selloff continues because everybody except the bloodied value or value-and-growth guys owns these stocks already so they can't buy any more, and there is no cessation of new equity issuance. Of course, any artificial buyers -- short sellers who want to cover their shorts -- have so long ago been taken out and shot that they can supply no cushion whatsoever to the decline.

In this market, capitulation tends to come fast. The margin clerks can create a bottom. Here's how it happens: Hedge funds and daytraders start thinking that the Red Hots are easy pickings on the short side. They short them knowing that they will be able to cover into the 2:30 p.m. selloff that the margin clerks create. (Don't believe me? Take a look at the way the

NDX

just smashed right through the floor in the last hour yesterday. That was margin selling.) But the stocks themselves don't fall, maybe because they are oversold and due for a bounce. Maybe because somebody actually has new money that he wants to put to work.

Maybe because people got smart and got off margin in a hurry; they beat the cleaver, so to speak.

The shorts then get squeezed. The momentum jumpers, who have been waiting for a move back up, jump in. And the process reverses itself and the gains come back. As this is an uncertain process, waiting for it may prove to be deadly. Or maybe it happens today. It sure didn't happen yesterday.

Those who read my blow-by-blow yesterday know that I was looking for this type of action before I committed new money. I was just recycling money that was raised by circling the wagons and selling the bogus opening. I have yet to commit

any

new money to these stocks. They are still dangerous. Until I see that cycle unfold that I just described, I won't. I will play the banks or

General Electric

(GE) - Get Report

or some of the more beaten-up consumer names that could still play catch-up. Less rewarding, less life-threatening.

There will come a time. Like pornography, I will know it when I see it. Again, maybe it is today. Sure seems possible as these are some horrendous declines, truly massive. But then again, all they have done in many cases is erase February's gains. The gods of carnage may not be requited just yet.

Stay tuned.

Random musings:

Stop thanking me for telling you to take something off the table. That was my wife speaking. I didn't have a clue about selling until she taught it to me. I only knew to buy.

James J. Cramer is manager of a hedge fund and co-founder of TheStreet.com. At time of publication, his fund was long VeriSign, E.piphany, and Cisco. Cramer's fund also may be long or short certain stocks in his biotech or B2B rotisserie leagues or TheStreet.com New Tech 30 index. His fund often buys and sells securities that are the subject of his columns, both before and after the columns are published, and the positions that his fund takes may change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Cramer's writings provide insights into the dynamics of money management and are not a solicitation for transactions. While he cannot provide investment advice or recommendations, he invites you to comment on his column at

jjcletters@thestreet.com.