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Technology Stocks : America On-Line: will it survive ...?
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To: Paul Merriwether who wrote (8729)3/10/1998 10:47:00 AM
From: PAL  Read Replies (1) of 13594
 
Charles Pradilla, chief investment strategist at Cowen & Co.,said, while most of technology is getting beaten up, investors are just shifting their buying to still-safe names.:"A number of stocks just keep going up because people don't want to leave the market. America Online is up every day several points [because] people are saying, 'I don't care what the valuation is, if they hit the numbers, I want to be there because I want to be in the market, and I want to be in technology.' "

Charles Padilla is making an observation. For a change there has been no upgrades or reiterate to buy internet stocks by analysts. Are they getting nosebleed at this pricey levels?

The recent rally from chip stocks are typical of Wall Street actions which are against contrarian. When there is a sale at Nordtsrom or Macy's, people are rushing in. After the sale is over the store put back the higher price and people stop coming.

The reverse is being done by common folks: currently there is a sale for INTC, CPQ, DELL etc. But people are dumping that stock to buy "blue chips" like AOL YHOO AMZN Preview Travel, Onsale etc. They rationalize: as long as they hit the numbers. INTC etc should hit the numbers as well if analysts keep lowering their estimates as they do on internet stocks.

Do not be surprised if the recent rally is a sucker rally to get small investors in and then big funds are dumping their holdings. AOL has been having resistance at 126 level.

Sanity will come back to WS.


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