Internet stocks, the companies formerly and fondly referred to as pioneering e-businesses, are once again the market's leaders. For better or for worse.

Encapsulating the arc are the online brokerages. Sitting at the nexus of the bull market and the burgeoning Internet, their rank and prices rose and crashed dramatically, along with the bubble. Now, they're headed back up.

While the denominator is greatly reduced, online brokerage stocks have posted percentage gains over the past few days that are reminiscent of their birth years in the late 1990s.

Over the past two trading days, E*Trade ( ET) has gained 14% to $6.10, while Ameritrade ( AMTD) has jumped 19.8% to $6.23 and Schwab ( SCH) has added 9.9% to $9.14. (Prices reflect Monday's closing numbers.)

"There are several catalysts for the stock action: the overall market seems to have bottomed and we are seeing a gradual pick-up in trading volume," says Lee Bronstein, a trader at New York-based money management firm Black Diamond Securities.

Whereas online firms gave up market share during the downturn, a recent report from Putnam Lovell Securities suggests online trading has rebounded some 10% to 15% over the past six weeks, despite overall volume increasing just 5%. "We should begin to see sequential revenue and earnings and revenue growth of 2%-5% over the next few quarters. This is a big shift from declining volumes and revenues, " says Rich Repetto of Putnam Lovell.

More important than current volume, revenue or margin numbers is the general perception that a long-anticipated industry consolidation is finally arriving. "When TD Waterhouse was put up for sale last week, that gave the signal that the shakeout was ending and the big three (Schwab, E*Trade and Ameritrade) will be divvying up the online brokerage pie, " says Bronstein.

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