With this type of volatility going on, there is substantial money to be made. But it remains to be seen whether these stocks are now momentum plays to be chased higher, or overbought plays to be shorted lower. The biggest problem is that there is no way to judge the rationality of investor sentiment. Many smart people went broke in the late 1990's by shorting irrationally priced internet stocks that continued to power higher for years. Many others went broke by failing to sell on the way down in 2000, or even buying on the dips. The strategy I am taking is to wait until earnings get closer, because that should force these stocks back to sensible valuations. I don't have a very good sense of how RENN will fare for Q4 and full year 2011, but with its pile of cash and renewed interest in the stock, it is hard to imagine it trading below $4 again. If it gets to $4 again, I might consider buying, but if it gets to $7, then it would look like a good short. If current price levels hold, I will be short both DANG and YOKU. DANG simply loses too much money (and will be losing more). With a $2.6 billion market cap, YOKU is simply overpriced. Upcoming earnings reports will correct both of these stocks substantially. One stock I did buy on the dip in December was SINA, which I previously noted was already looking cheap in the $60's, and a true bargain in the $40's. But I am nervous about a reversal in the current frenzy, and happy to book some quick gains, so I sold out of SINA for now. I still like the company and the stock, but if Friday's buying frenzy was the only thing driving the stock higher, it could drop back quickly. Disclosure: The author holds no positions in any of the stocks mentioned.