Fundamental analysts are now looking for the sector's blue chips to lead a rebound, as consumer interest in shopping and online lifestyle management ramps up in the fall. ''We believe the biggest companies will continue to get bigger, which is why we continue to recommend overweighting stocks like AOL and Amazon,'' said BancBoston Robertson Stephens analyst Keith Benjamin.
He said he expects the leading stocks to reach new highs by year-end, as people spend more on the Web on everything from concert tickets to banking fees.
Technician Yager also sees AOL as a leader, one whose stock could eventually rally. But for now, AOL's momentum is carrying it lower.
''The trend (for AOL) is still down, with a projection around the 80 mark,'' she said, noting that it passed through an important level at $89. ''AOL's stock would have to rise to $130-$145 to suggest that there is a move to a new bull market for this stock.''
William Raftery, technical analyst at Salomon Smith Barney, noted that even a chartist must take a step back when approaching the relatively new genre of companies.
''Let's not be too negative at this stage of the game,'' he said. ''We've got some further damage to be done, and then we go through a healing process. But at some point, the better companies will come to the fore.''
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