It's official: Dot-com psychology has shifted.
I know, since last summer people who have declared the cyber bull market over have looked as foolish as the p/e multiples of the stocks themselves at their peak.
However, the bubble seems to be popping several ways.
First, there is the overall selloff. And, not just among the cockamamie set.
I'm talking about the so-called blue chip Internet stocks, all of which are down more than 30% from their highs. You know who they are: America Online (NYSE: AOL - Quotes, News, Boards ), Yahoo (NASDAQ: YHOO - Quotes, News, Boards ), CMGI (NASDAQ: CMGI - Quotes, News, Boards ), eBay (NASDAQ: EBAY - Quotes, News, Boards ) and Amazon.com (NASDAQ: AMZN - Quotes, News, Boards ).
eBay is off 25%, AOL and CMGI are down 31%, Yahoo has fallen 35% while Amazon is down 38% from their all-time highs. And they are showing no signs of attracting bottom-fishers.
Another sign that Internet stocks are becoming Inter-not stocks: On Wednesday Comps.com (NASDAQ: CDOT - Quotes, News, Boards ) finished its first day of trading below its $15 IPO price, only the second of about 50 Internet IPOs to suffer this fate, according to The Wall Street Journal. Ouch! And on Thursday, it fell another $0.75 to close at $13.50.
The big question is: How many orders for expensive cars, vacations and jewelry have been cancelled by Comps.com employees in the past two days?
Finally, another sure sign that dot-com mania is abating: After Wednesday's close, CompUSA (NYSE: CPU - Quotes, News, Boards ) announced a loss for the third fiscal quarter along with overall lousy results. However, it also said it would consider taking its Internet unit public.
You know that a few months ago, investors would have shrugged off the earnings report and bid up the shares by a factor of three on the murky Internet announcement.
Not anymore!
Shares of CompUSA closed Thursday at $6.19, down $0.94, or 13.2%.
Internet stocks will come back, but only after they drop a lot more.
Meanwhile, cyclicals like Alcoa (NYSE: AA - Quotes, News, Boards ) were up nearly 6% on Thursday.
There's still hope for sanity, folks.
Personally, I hate finding articles like this about our beloved sector. But when cyclicals like ALCOA and stocks like TIN, HON are up as much as the nets, we would not be ignoring them. Not to forget some of the biotechs and stocks like KMB which reached a 52 week high today. I have missed AA for the third time in 3 quarters and every quarter I say I'll learn, but I never do. I'm also guilty of passing it over for the more exciting NITE etc. But lets' not forget that even if the nets are not good now, the fact that they are correcting will afford much greater opportunity when they are done correcting, which could be after yet another 20-25%. I for one am not going to sit on my hands taking chances with them when we could be picking up other winners. AMAT was a great trade this week, so was IMNX, even SE, MACR, PWR etc. WE should be playing both sides. I love the sector as much as you all, but I'm not averse to picking up some puts when I feel its where the action is. For a 6-10k investment you can come back with 1 or 1.5k in just a matter of an hour or so. I know its not a quadruple bagger but its money. I'm still long SWS because I think this is bucking the trend and a fab company XMCM is a 'story' stock and I'm not sure it will goo for even a gap up on Monday.
In just 6-8 weeks the new earnings season is in full swing and we'll be making lots of money from our plays, we must check out the earnings dates of even the most obscure ones the VSTR, the VCST's etc. I know TBFC was good for 20 points 1 day before and 1 day after earnings.
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