The Fear is out there....FYI...
<<Spooked investors sell Net stocks
Profits in demand; Traders seek evidence of fear
By Bambi Francisco, CBS MarketWatch
Last Update: 7:10 PM ET Apr 24, 2000
NEW YORK (CBS.MW) -- Internet stocks took it on the chin Monday, as investors, spooked by weakness in shares of high-tech bellwether Microsoft, were less forgiving of companies with no profits.
"When you have one of the great bull-market stocks -- an icon of American companies -- come under pressure, then investors get spooked and run like chickens from everything," said James Glickenhaus of Manhattan-based Glickenhaus & Co. See full story.
"And given the nervousness in the markets, the one criterion investors are increasingly demanding is an ability to earn a profit," he added. "You don't look to Net stocks for that."
Nasdaq vs. Amex Internet Index
The 17-stock Goldman Sachs Internet Index ($GIN: news, msgs) fell 8 percent, after gaining 12 percent last week. In the prior week, ending April 14, the Net barometer plummeted 33 percent.
The Amex Internet Index ($IIX: news, msgs) gave up 6 percent after rising 12 percent last week on the heels of a loss of 28 percent in the previous week. America Online (AOL: news, msgs) fell 2 3/4 to 57 1/4. Yahoo (YHOO: news, msgs) fell 9 1/4 to 113 7/8.
The Nasdaq Composite Index fell 161 to 3,483. Shares of Microsoft (MSFT: news, msgs) gave up 16 percent on volume of 156 million shares. See Silicon Stocks.
Exodus (EXDS: news, msgs), whose shares suffered a steeper decline relative to the overall market, had its own company-specific problems to contend with. The stock dropped 23 percent on volume of 32.7 million shares.
Searching for signs
Still, heavy volume is a good sign.
"The volume is a good indication of capitulation," said Todd Clark, head of listed trading at W.R. Hambrecht. "Typically, when you see a big-volume sell-off day, that means stocks are changing over from weak hands to strong hands."
But Clark is still searching for evidence that the selling is over for the overall market. "I haven't seen heavy-volume selling for the overall market," said Clark. "That could mean that other stocks could come under pressure."
Additionally, Clark pointed out that another technical sign that could indicate a bottom is a larger amount of put options sold relative to the number of call options. "The last time I checked, there were 50 puts traded for every 100 calls," he said. "That indicates that there are more people still betting the market will advance than decline.
"That's not what happens at a low. At a low, there's usually 100 puts traded for every 100 calls," he said.
And, not to be overly somber, if the market opens higher Tuesday, chances are those early gains will evaporate, he added.
"You'd rather see the fear early in the trading day," he said. "Fear is a key element." At lows, technical traders want to see fear, not greed, he said. That, based on technical analysis, that means the market is testing its recent lows. If the market opens higher, and there's no follow-through, that's a blow to confidence, he suggested.
"At this point, I don't think this has anything to do with fundamentals," said Clark.
Indeed, investors are ignoring solid quarterly results. According to Joe Cooper at First Call, of the 39 Internet companies that have reported quarterly results, 37 have beaten consensus estimates.
ExciteAtHome (ATHM: news, msgs) is the lone company to fall below expectations....>> |
