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Technology Stocks : Amazon.com, Inc. (AMZN) -- Ignore unavailable to you. Want to Upgrade?

To: Sarmad Y. Hermiz who wrote (41241)	2/20/1999 5:25:00 PM
From: Rob S.	Read Replies (2) \| Respond to of 164684

When Amazon started the move down from it's peak at 199, it was ahead of other stocks in the sector. Of course Amazon had run up more in the previous few days than most other Internet plays. For instance, YHOO, a stock highly correlated with AMZN, continued to play catch up after Amazon started the move down. First up but first down. For the past several days, Amazon has been trading in a range. The momentum went out of it but there was little panic selling. What helps to keep this stock so volotile is the high degree of shares shorted. Even though that has let up a bit from levels seen last fall, it is still very high. So once Amazon starts up, a move of 25% is not unusual. There only needs to be a "catalyst" of renewed interest in the stock that causes some shorts to panic cover. Another factor working against the rises we saw before JAN 18th is the increased margin requirements or trading bans many brokers have put in place. Many Internet stocks have moved down very sharply and are due for a technical bounce. Amazon will likely participate in any further bounce we get. I think the stage of the tech rally and overall market is that the premium on tech stocks is at the point of discounting their radical upside potential. They are just too risky. Even wonderful, proven companies such as Dell and Microsoft are trading at such high multiples that it if held to the upper bounds of their 5 or 10 year historical valuations, they could easily take 3 or five years of expected growth to fall into line. Of course what was considered highly valued months ago is now even more highly valued and their is a certain amount of wisdom to "who knows were they can go?" ----------- Another rehash of "where we are now": That gets back down to the underlying forces that have helped to drive up the darling stocks (it has been a darlings market): Greenspan's FED and other world economies have pumped up liquidity an huge loans to help float problems overseas in the face of wolrd-wide over capacity that has driven down commodity prices. The result is lots of money floating around, lots of cheap stuff to buy, rising US wages, and higher amounts of expendable income - part of which has been plowed into equities. Because foreign economies were in recession or growing slowly, US investments looked lucrative and safe. Bubble markets require momentum. If the momentum of money flowing into the market levels off, the highly inflated stocks come down. That is where the market is now. We are certainly not seeing any sign of recession and few signs of inflation. This weeks economic numbers pointed to a very low inflation rate. Even though some core parts of the economy are experiencing inflationary pressure, primarily skilled wages, drops in oil prices and some food stuffs helped keep inflation to only a .1% increase for the period. Better than most economists expected. I don't expect a crash in the markets but hope to see a "rationalization" in which the highly valued stocks come down a bit and money rotates into low-mid cap stocks and funds. What is surprising is how many good values there are even though many stocks are priced to ridiculous levels.