SAN FRANCISCO -- A funny thing happened on the way to yet another out-of-control day in the tech sector -- traders decided to take some profits.
following the company's earnings report after the close on Tuesday may be prompting some of the weakness. After trading higher on the open, Intel has slipped, recently trading down 2 1/2, or 4%, at 58.
, which reports its earnings following the close today, posted gains early in the session before profit takers stepped in. Ameritrade was down 22 11/16, or 13%, at 150 9/16, almost 40 points below its session high of 188 3/8, but a far cry from 65, the level where it traded as recently as April 5.
, which doesn't report until April 22, was off 1 at 124 1/2, a significant distance from its 144 1/2 session high.
National Discount Brokers
was trading down 14, or 16%, at 72 1/2 after running up to a high of 93. Shares of
were down 7 7/16, or 14%, at 44 3/4.
James Marks, an analyst with
Deutsche Bank Securities
, said he can't recommend buying into the sector because of valuations, even though he has nothing but good things to say about the online brokerage business. Marks said that even the most optimistic scenarios looking out for 10 years cannot justify the levels many of the companies have reached. Marks believes results for the first quarter for these companies should be good, but he still sees a "buy the rumor, sell the fact" scenario developing as the earnings season plays out.
Like other analysts, Marks thinks that the stocks will slip when the market slips (whenever that is). But brokerage stocks will see a "triple whammy," he said, with fewer people opening accounts, less trading activity and investors buying less stock on margin.
Marks has expressed the same concerns in the past. He placed a hold rating on both Ameritrade and E*Trade back in February due to their valuations. But he does not begrudge those who have benefited from the run-up; he only cautions that the stocks remain a risky play.
"If you feel comfortable playing that game, go ahead and play it," he said. "If someone else is going to make the money, God bless them. Let them take the risk."
On the Move
Tuesday's 76 1/2 point gain in
was enough to get some people to think about selling. The stock was trading down 37 1/32, or 16%, at 198 around midsession.
Other online banking stocks that reaped rewards Tuesday are falling as well.
, which operates
, was down 29 1/2, or 21%, at 111.
was down 10 1/2, or 34%, at 20 3/4, while
was down 9 3/4, or 24%, at 31 3/8.
Among the day's winning stocks is
. The company said it had entered into an agreement with
that is expected to boost the number of successful bids customers make for airline tickets and hotel rooms. priceline.com was up 9 3/16, or 11%, at 90 11/16, though it was off its session high of 99 1/4.