SAN FRANCISCO -- Internet leaders have been anything but of late, and the weakness seen in recent sessions could persist into August, according to one technical analyst.

John Murphy, president of

, believes the sector could be in for more bad times and may soon retest lows from June. Murphy said the sector has been closely tracking the bond market over the past few months, and further bond weakness could keep the pressure on. He said the rally in Net stocks from the middle of June to the middle of July now looks like a bear-market rally.

Murphy said when Internet Sector

index peaked at 690 on July 6, it stopped just short of a two-thirds recovery from its April/June decline at around 700, and it needed to get through there to keep the rally going. He said if support at the June 28 low around 560 does not hold, the DOT could slip back to the 500 level, with 495 the index's low from June 15. It recently was trading down 11.13, or 1.9%, at 582.62.

Of particular concern, Murphy said, has been the performance of some of the industry bellwethers:

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Murphy said Amazon was the weakest of the group, falling below its 200-day moving average of 110 on Thursday amid heavy volume, another negative signal. Amazon has already slipped below its June 14 high of 104 1/2 in trading today, and Murphy said it has potential to test the June 14 low of 89 3/4. It recently was trading down 1 1/2, or 1%, at 105 11/16.

Yahoo! was trading below its 50-day moving average at 150 but just above the 200-day moving average at 140, which he said was a critical spot. Yahoo! traded to around 118 mid-June. It recently was down 1/8 at 145.

AOL also was trading below its 50-day moving average at 116, but it was not close to the 200-day average at 89 3/4, which also happens to be close to the June 14 low of 89 1/2. In recent trading, AOL was down 4, or 4%, at 106 1/2.

Murphy said Internet stocks, along with the rest of the technology sector, have been leaders of the rally in the stock market over the past month, and if the market is losing the leadership of techs, "there's very little to hold it up." Murphy said he put out a note today that the summer rally in the market may have run its course and could be weak into August.