Number One: Wednesday, December 30 will be beginning of end for this group.
Part I:
Monday 28, I-net investors will bid these [and Y2Ks] up. . .just because it's Monday. This is despite the multitude of holiday and Barrons articles attempting to deflate these high fliers. And because the big Wall Street players will be off for the holidays. . . "When the big cats are away the internet mice will play." CMGI will soar as the 2 for 1 split takes effect. Net result of group...up 15 pct.
Tuesday 29 is the naturally correct day to begin sell-off on fabulous capital gains realized for 98 with settlement to occur in 99. But the I-netters will not be so quick to let go, therefore Tuesday will be a tug-of-war with some short, some long, some selling and some still hopeful for last second gains. . . net result is ending flat. Starting about 2pm EST the bears will move in [probably fueled by a POSITIVE outlook to get some suckers to buy into the selling and hold the price up].
Although my guess is that the declines in these stocks will technically occur at 2 pm on Tuesday, Dec. 29. . . the closing price is the only fair way to guage this contest and the 5-day 40 percent decline will be initialized with the closing bell on Wednesday, even though the Bears will take their positions Tuesday afternoon.
So on Wednesday, Dec. 30. . . we will see the beginning of the 40 percent decline, as last minute tax loss sellers and Y2K "won't-hold- over-New Years" sellers converge in a feeding frenzy. These moves will further be put into panic mode by an article or interview with a respected big shot around Wednesday afternoon, saying that there is a "change" happening in internet stocks...and he predicts certain internets will fall while other internets will rise.
History: Beginning on December 8, hi-tech and high-yield fund managers had already began swapping AOL for ATHM....YHOO for SEEK...EBAY for UBID, etc. in preparation for 1999 and a changing of the guard, if you will. This trend will once again [Wed, Thu and Mon, Tue, Wed] increase as the January Effect is completed. . . about the time the big shot announces the change is now being "discovered."
Thursday the 31st, will be a thinly traded continuation of Wednesday's panic loss. . . with additional, tho marginal losses in this group for same reasons as Wednesday.
Part II:
The media is going to have a field day with finding ANY problems due to "lookahead" programs [such as accounting], that fail on January 1, 1999. This will consume talk and news programs over the New Years Holidays and feed the FEAR. It does not matter that the problems will be scattered and isolated. . .it will be perceived to be enormous and widespread.
So Monday, Jan. 4 will be driven by FEAR. Everything moves lower again, including our little group....now mostly forgotten...Y2Ks soar.
The low for our AMZN, YHOO, AOL, EBAY, CMGI group may be reached here....in just 4 days. Though I am adding the following Tuesday, Jan 5 for good measure.
But Tuesday, Jan. 5 [actually beginning late aftn on Monday] a rally will lead the Dow higher when fund managers, corporate investors and other major institutions POUR money into the market. However our little internet based group will be passed over by the VERY narrow rally of the best-of-the-best companies. If we don't see 40 percent by this group we will see darn close to it by this date.
My further feeling is that it will recover 75 percent of these losses over the following few months. . before settling down awaiting the next internet mania.
As for reasons for decline of these stocks. . . there is NO SINGLE REASON. Of course they are overvalued. . .of course they are "due" to be shorted. But if there HAD to be a single reason that caused the declines illustrated above, it would be the "changing of the guard" scenario. Competition has had a good while to take aim and knock these guys off their pedestals. And there are plenty of other stocks that could see more dramatic gains than these, "so let's go play there instead."
SEEK/DIS will be very effective in bumping off YHOO from the number 1 position. Rumor of this possibility will be the main cause of YHOO's collapse.
AMZN will be hit mostly by e-commerce predictions of competition from NTKI/CDNW, BKS and BAMM, and others....but MOSTLY from NEW COMBINATIONS of powerful competitors that have yet to be launched.
EBAY...that cash cow....will hold gains better than the rest of these. Deservedly so, due to their business model....but it will fall with others as it is perceived to be "just another internet high flier."
AOL will be hit hardest by the vast publicity broadband gets over the holidays. As ATHM and wireless broadbands move into the spotlight for 99 high fliers. . .AOL is passed over. Now if AOL makes an announcement of a deal with At Home or Roadrunner [TimeWarner] they could be saved and hold gains. But I believe their pride will keep them from going that route and they will fall hard before starting a recovery.
CMGI just goes along for the ride of the other high fliers, as it holds other's stocks....therefore there is no specific reason for CMGI's drop.
Predicting the future can be fun and rewarding.
Rande Is. . .
PS> Further predictions can be found by some really talented folks on SI at my thread, Rande Is. . .HOME.
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