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The Net Downgrades Will Come

What's next for Net stocks is some good old-fashioned downgrades. Right now, the likes of Blodget are just pooh-poohing.
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Net's getting really nasty now. Felt like I was in a locker room Thursday, so many towels being thrown at the group, or maybe even in a

Fieldcrest

factory.

We started getting more deals cancelled today and we are beginning to see deals being priced at the high end of an unbumped range. That's the first sign of deal capitulation.

Towels thrown, deals being postponed, we are certainly getting there. (Although we shouldn't hold our collective breath as there are almost 100 Net deals still in the queue.)

Now all we need are some good old-fashioned downgrades, and by gosh we will begin to put in some sort of murky bottom. But we have to have those downgrades. Right now we have people pooh-poohing.

Henry Blodget

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pooh-poohed today in a talk that I was deathly afraid would be misinterpreted. He talked about how many of these Net stocks would be teenagers in price if we used traditional growth matrices. He mentioned that he had been too bullish, and that he now expected the correction to continue.

But he downgraded nothing. He would not take his beach blanket of a towel and throw it on the pile of investors' dirty hand towels.

We have to lose someone. During the great Net selloff of last year we had analysts putting out right sells on the Net. Talk about a bottom!

Hoo-hah.

Right now the analysts have their sell towels hidden in the closets, sealed shut with massive super-de-duper-strong buys. We won't get a bottom until those closet doors are blown off and the analysts' towels are thrown where all can see, into the buy-to-hold hamper that gets the real capitulation in full swing.

James J. Cramer is manager of a hedge fund and co-founder of TheStreet.com. At time of publication, his fund had no positions in any stocks mentioned. 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.