RealTime IT News

Internet Investors In A Real Fight

Using round-by-round scoring, the past four weeks are a draw. Under the point system, however, Internet stocks are trailing on all cards in their latest bout with investor anxiety about overvaluations and rising interest rates.

Let's look at the action as measured by internet.com's Internet StockTracker weekly newsletter: Four weeks ago, Internet stocks rallied for the first time since hitting the canvas in mid-March, as all 12 sectors tracked by the newsletter posted gains. A week later, every sector fell back into the red, only to reverse course again the following week with advances across the board.

Then came this week's bloodbath, in which the top-performing sector Consultants/Designers lost 12 percent.

So that's two up and two down, which is a lot better than the prolonged freefall from mid-March through late April. Dig a little deeper, though, and it's clear that Internet stocks are still groping for the bottom.

After the first post-correction rally, in late April and early May, 47 Internet companies had gained in the previous month's trading, a period that covered most of the spring slump (or burst, if you prefer).

As of Wednesday, the number of monthly gainers among Internet stocks had risen to 66. While encouraging, it also means the vast majority of 'Net tickers (82 percent) have lost ground during a period when the market has twice rallied.

But go back just one week ago, and 147 Internet stocks more than twice this week's total were up for the previous month.

What it all means is that the bottom is near. Finding it, however, is a messy process, with many stocks hitting new lows and then bouncing up briefly, only to test the limits of its depths again. Look at any number of individual stock charts Netivation.com, PlanetRx.com, OnlineTrading.com, HotJobs.com, ilife.com; there just are too many to mention) and you'll see this pattern.

Of course, reaching the bottom is one thing; regaining upward momentum is another, and it may be several weeks or months before that happens. Therefore, to return to our boxing metaphors, Internet investors must stop hoping for a quick knockout (stock run-ups) and train to go the distance (invest in long-term winners). If you're disciplined, patient and pick your spots, the knockouts will come.