Last Friday I wrote there were clear signs that the spring correction which sent nearly half of all Internet stocks down more than 50 percent for the year had played itself out.
One week later, the bottoming-out is beginning to look like a comeback. For the first time since January, all 12 sectors listed in internet.com’s Internet StockTracker weekly newsletter posted gains for the week ending Wednesday.
The Speed/Bandwidth sector led the charge, with a nearly 13 percent increase. Other sectors also showed genuine strength, including Search/Portals (up 10.7 percent), Internet Services (9.6 percent), Advertising/Marketing (8.8 percent), E-commerce Enablers (8.7 percent), Security (8.3 percent) and Content/Communities (7.1 percent).
Here’s another way to measure progress: At the market’s close on April 13, only two of 345 Internet companies tracked by the newsletter had gained in price during the previous month of trading. Through Wednesday’s trading, monthly gainers totaled 48.
And for the recent week, 186 ‘Net stocks (that’s 54 percent) headed north, while another nine managed to break even. That compares to 45 gainers two weeks ago, and 120 last week.
Another week like this, and I fear many investors will forget all about the correction and its inherent lessons (No. 1: Earnings matter. Really.). But with the Federal Reserve’s interest rate hikes weighing more heavily on ‘Net stocks than they did last year, and with quarterly reporting season over, I’ll be surprised if the bounceback evolves into a full-fledged run-up.
Of course, with speculators and momentum traders just a modem away, nothing the market does should be surprising. Here’s hoping for exuberance of the rational kind.