SAN FRANCISCO -- Technology stocks were higher at midafternoon Friday, in action that strongly resembled last Friday's trading pattern. The Nasdaq Composite Index was recently trading 40 points higher, but had slipped from a 55-point gain earlier.

Last Friday, ahead of the long holiday weekend, the Nasdaq closed with a gain of 51 points.

Dan Mathisson, head stock trader with

D.E. Shaw Securities

, said he saw the buying among Internet stocks as short-covering more than anything else, but he does not expect traders to return on Monday and bash the sector again as occurred earlier this week.

"I suspect the big hit has been taken already, and now they're going to try to form a base over a period of time," he said.

But he also does not see the sector going crazy on the upside.

"The bloom is off the rose," he said. "The action we saw two months ago is not going to continue. There are a lot of scared people in the market, and there are more issues, particularly supply."

Speaking of supply (smooth transition), there are a number of Internet IPOs debuting today, and they have been mostly faring well with the Net sector positive.

Internet investment banking and brokerage firm

Wit Capital

(WITC:Nasdaq) was up 5 3/4, or 64.5%, at 14 3/4 recently. Also,

High Speed Access

(HSAC:Nasdaq), a cable Web access company, was up 6 1/2, or 50%, to 19 9/16. Network Access Solutions (NASC:Nasdaq), which provides DSL Internet access to

Bell Atlantic

TheStreet Recommends

(BEL)

was flat at 12.

Osha Inside

Intel

(INTC) - Get Intel Corporation (INTC) Report

was trading higher along with other chip manufacturers. It was recently up 1 1/4, or 2.5%, at 51 3/4. There was talk in the market earlier that

Merrill Lynch

analyst Joe Osha had raised his rating on the company, but that was not true. His research note today was more in response to a warning shot fired by computer disk-drive maker

Quantum

(QNTM)

on Thursday.

Quantum said its fiscal first-quarter earnings will be between 5 cents to 15 cents a share, citing aggressive pricing in the desktop hard-drive market. The 11-analyst forecast called for 31 cents vs. the year-ago 2 cents. The company also sees first-quarter revenue coming in below the fourth quarter's. Quantum was trading down 1, or 5%, at 18 9/16.

Osha said conversations with Intel "have revealed that the company is becoming aggressive in terms of unit sales; however, management remains cautious in terms of product mix." He added that "at this point in time we are not inclined to take our overall top-line estimates down. In our view, gross margins will be in line with our forecast, given cost-reduction measures that are being implemented."

Osha told

TheStreet.com

that strong sales of Intel's high-end server chips plus manufacturing cost reductions would make up for reductions in average sales prices caused by robust sales of the Celeron. And that should boost profit margins.

"They are taking an awful lot of cost out of the equation," he said. He also believes that the Christmas season will be strong and Intel will see an upswing toward the end of the year. "If things get cheaper you sell more of them," he said. "U.S. retail is going wild and things are getting better overseas."