Silicon Valley: Tech Stock Update: New Year May Be Unhappy for Net Plays
By David Shabelman
Staff Reporter
12/31/98 3:50 PM ET
SAN FRANCISCO -- Internet-related stocks continue to get hit today, and it may be the start of something bigger.
TheStreet.com Internet Sector index remains down 1% for the day at 401.04. On Monday, the DOT (affectionately known in these parts as the Department of Transportation index) peaked at 457.85.
Michael Murphy, editor of Overpriced Stock Service and manager of the Murphy New World Technology fund, said he began to sell into the Internet strength on Monday in all of the search-engine companies and the auction sites, along with some of the online brokerage services.
"I think the whole sector is about to blow," said Murphy. "There's been a lot of people waiting for the calendar to turn and come Monday, they'll be for sale."
Murphy said market makers began to sell around midday Monday in advance of selling by individual investors, who could sell on Tuesday and have settlement of the trades at the first of the year for tax purposes. Day traders also stepped in to add to the momentum, he said, and on Monday he expects institutions to bail in a big way.
"I really think it's going to be a bloodbath," said Murphy.
Some of the price action appears to bear out what Murphy is saying.
One of the biggest movers of this week was Active Apparel Group (AAGP:Nasdaq). The stock surged from a little over 1 on Dec. 23 to a high of 25 on Tuesday after its announcement Monday that it was establishing a Web site. But shares of AAGP are now back below 9 today, as the sector continues to cool and traders book profits. Shares of Bluefly (BFLY:Nasdaq) are off nearly 20% after more than tripling after announcing agreements with Lycos (LCOS:Nasdaq) and Yahoo! (YHOO:Nasdaq).
Murphy said even though online retailers posted better-than-expected sales over Christmas and the outlook going forward is positive, it is still difficult to be profitable online, and the low cost of entry makes for heavy competition.
from TheStreet.com |
