After last week's sharp rally, the question surfaces: "Are the bears gone? Is it time to buy technology stocks again?" The answer remains as it has been for the past two months: Most of these technology stocks will never see their highs again, and a select few will go on to be great winners. That is the way it is when a manic period ends.

In a bull market, selloffs are sharp and scary, forcing many to flee stocks only recently purchased. Quite often the decline ends just as the oscillator gets oversold, and more often than not, as stocks reach their support levels. When the market isn't bullish, the opposite is true; the oscillator tends to get overbought just as most stocks reach their resistance levels. This is the situation I believe we're in with the

Nasdaq Composite Index

right now.

The oscillator is not yet overbought. Over on the Nasdaq, the oscillator will not be maximally overbought for about another week. This doesn't mean we have to rally every day, but it does mean that we can rally, or at least have an upward slant, for the next several days. Heck, the Nasdaq's resistance is still about 100 or so points higher, so that's the reason I say there is still room to move.

Let's face it, we had a bubble in technology stocks this past spring, and it's burst. There will be stocks that continue on in their strength, with this 35% slide just a short-term blip along the way, but there was so much damage to a large majority of tech stocks that the March highs were it for them.

When I see these tech charts, I am reminded of the huge bubble we had in biotechnology stocks back in the early 90s. I can recall how it was generally thought that these companies were going to cure the world of all its ills. They were the future. Most of them had no current earnings, but they all had products and the prospect of future earnings. I have tried my hardest to remember just a few of the hottest names from that time period, yet I cannot come up with one. And I can't even look them up, because most of them eventually went out of business or were gobbled up, for a small sum by larger drug or biotech companies.

Compare this to technology stocks just a few months ago. It was thought that technology would take over the world (isn't that what

Bill Joy

feared?) and that it had actually created the goldilocks economy -- there would be no more recessions, we were immune to higher interest rates, the


didn't matter anymore. Technology would make us all so much more productive and these stocks just had to be owned for that. While not an exact comparison, the mindset is certainly similar.

And for that reason, I believe there are a majority of technology stocks that will fail in a big way, in a manner similar to many of yesteryear's biotechs. A couple of years from now, you might not recall the names of some of the hottest stocks of 2000. That is just the way it works.

But there is a bullish side to this too. The survivors ultimately thrive.

Take the example of


(AMGN) - Get Report

, which was one of those highfliers back in the early 90s. After having increased tenfold, you can you see the double top it made in 1992-93. (How many tech stocks today have that similar pattern?) Amgen fell 60% from that high and for several months it bounced around at its lows, then it had a big rally that lasted four months. But that rally failed and it eventually came almost all the way back to the lows.

Amgen, one of the survivors, eventually went on to become a big winner, but it took six years before it made it back to 1992's high. Six years is a very long time to wait in this market. It may not take the surviving tech stocks that long to build bases, but I am not a believer that a base can be built in just two months either.

The Nasdaq lost its decade-long leader back in December, when


made its high. Or, if you prefer


to be the leader, then it lost its leadership when Cisco faltered. If you're now wondering if



is the leader because it has yet to falter, I would ask myself what sort of market moves through leaders like that. It's like a government rotating through leaders with votes of no confidence. If you keep losing the leaders, eventually the rest will follow.

However, in the near-term we are not yet overbought and have not yet reached resistance, so there is still some room to go on the upside.

Helene Meisler, based in Singapore, writes a technical analysis column on the U.S. equity markets on Tuesdays and Fridays, and updates her charts daily on Meisler trained at several Wall Street firms, including Goldman Sachs and Cowen, and has worked with the equity trading department at Cargill. At time of publication, she was long Amgen and Microsoft, although holdings can change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. She appreciates your feedback at