. . . . . Is this the Bottom of the Internets? . . . . . .
Rock, I'll tell you what I am thinking right now about how to tell the bottom of the Internets. . . . . incidently. . .coffee shop internet terminals could not get me logged in. . .so I am coming compliments Palm Springs Public Library. . . everyone is still sleeping after a late night.
THE CROSSROADS
I suspect we have hit a crossroads of sorts on Internets. Take a look at the ticker. . . Here is what I am seeing. The marginal and dubious internets are still on a southern route, whereas the tried and true blue Rock solid ready for NGI internets bounced nicely today.
Now what does that mean?
Well lets discuss what it might mean. . .and of course I am always open to differing views. . . and for some, congrats. . .I won't get to debate with you today.
Could it mean that fund managers took this Inet crash as a buying op for starting positions in the best of the Inets? Well, we did when we started buying DCLK and ATHM.
Along these lines. . . take a look at the dollar winners today. They include: BRCM, YHOO, LCOS, BCST, QCOM, AMTD. . . the usual suspects. . .plus a few others like PCLN and ABDR [is this the Abacus that DCLK is buying for a billion?]
Then we look at other internet leaders such as DCLK and the online brokerages, etc.etc.
There seems to be a clear pattern starting TODAY. The great internets have turned north, while the dubious ones have not. If I was at home, I would track this movement. . . especially of those that made the hardest bounces TODAY. . . against those that saw deep declines today. Look at historical. . . has this happened before? Over the next few days, should a pattern develop along these lines. . .this could clearly indicate a "preference."
Now the only question remaining is WHO's preference? Is it the fund managers? Or is it just the speculative individuals or daytraders jumping back into their favorites?
Well, we know that the fund managers have tons of money sitting on the sidelines again. . . and as you recall. . .we predicted that the bargain hunting should start mid-June. So have they started loosening up? Again, as PATTERNS develop, we should know for sure. But how do we know today? Look at the time and sales logs. . . boring. . . .of a few of these nets. Check trading over the past 4 days. Was there an increase in size activity on the buy side today?
What does the buzz of the street say about it? Anybody have connections at some of the top houses?
Some may ask why I am so interested in what the fund managers are doing. . . .well, if you must ask. . . you may not have a firm grip on what REALLY moves the markets. Forget news. . .forget valuations. . .forget hype. When a Fidelity or Vanguard or similar mutual fund jumps into a stock with both feet. . . the market flinches. . .and so do many insiders privy to the buying and selling of such bohemuths [sp?].
So when we are looking for a "bottom" . . what exactly are we looking for. Many would argue that the technicals alone will tell us. But I believe that if that were true, everyone could accurately predict the bottom and everybody would win. But that is not the way the market works. I suggest that when the fund managers start picking their "lot" for future forward gains. . .the dynamic of the market adjusts with them. And momentum begins.
So the question of the day is this: Has momentum begun? Look at volume activity in the leaders. Forget the losers. . . most of those never WERE the property of the large funds. But look at YHOO, BRCM, LCOS, AMTD and BCST.
The volume of those on today's rally when compared to other rallys in the past month, should give us an indication of buying pressure. If that indication is not clear, then we have nothing. But my guess is that the buying pressure in these issues [including ATHM and DCLK] is evident. . .and if so, we may very well have a bottom for THOSE.
Now here is where it gets tricky and what I mean by the crossroads. The REST of the internets that are being "passed" by the fund managers should continue their downward spiral.
ONLY the LEADERS of each internet sector will be grabbed up by fund managers when they start back with buying. And from the volume list, it appears evident that the leaders are being bought back.
Now. . . . take a deep breath. . . .look around. . . .ready?
If there are "former" leaders that have suddenly become serious laggards and are not turning around like they should. . .AND there is no news that should give them artificial selling pressure. . . or there is not a known heavy short position that is not being let go. . . then it could very well mean that those issues. . . no matter how well they did last year. . . are being passed over by the fund managers this year. And I feel that such action is a leading indicator on the direction of that stock for the coming year and more importantly, the next internet buying season. . . .Not to say they won't or cannot come back. . .but I would be very careful about holding any internet stock long. . . that is a loser today.
But second tiers will have their day too. TFSM will one day see sharper gains than DCLK. But not at first. The first tier must get its rally LONG before the second tier even gets considered.
So. . . bottom line. . . do we have a bottom here?
You tell me. If what I have outlined above stands over the next few trading days. . . then I would say that buying yesterday was the smartest move we could have made. If those patterns break up again and we slip back into a funk. . . then we are back to waiting.
But please do not forget that this "rally" SHOULD BE VERY NARROW. If it broadens too much. . .that is no good. If it stays narrow, with just the leaders of each sector being the clear winners. . .then I would call the bottom as yesterday.
I did start taking positions in DCLK and ATHM and am looking seriously at others. . . so that must account for something in the instinct department. But I would like a day or so to confirm my theory. . . before going on the record. . . since I AM on vacation. . .and have extremely limited access to info.
Best wishes to all. . . and now back to my fun in the sun.
Rande Is |
