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Speculative look at Internet stocks

Posted: May 13, 2009 13:41 PM by Joey Fundora

Tickers in this Article: GOOG, JRJC, MOVE, REDF, TZOO, YHOO

Typically, when internet stocks are mentioned, Google, Inc. (Nasdaq:GOOG) is the first name that comes to mind. Lately, Yahoo, Inc. (Nasdaq:YHOO) seems to have been flying under the radar, despite still accounting for a large amount of Internet traffic through its search engine and email platforms.

While YHOO is certainly still a laggard in this group, it has quietly been creeping higher recently. Technically, it is only a few cents from seven-month highs and could be close to clearing a triangle pattern. I'm not sure if the buyout talks are starting to heat up or not. If they are, others in the group may catch a bid. In looking through the rest of the sector there are a few that are looking bullish, and also still close to a buy point.

One such stock could be Rediff India Limited, (Nasdaq:REDF). REDF is still in a downtrend that began in mid 2007, and volume in this stock has been drying up until recently. REDF was able to clear a downtrend line in late March and then maintain sideways momentum for the next several weeks. It had a very strong candle a few days ago, and has been trading sideways since. It looks like it is starting to form a bull flag and could head towards a test of prior support near $5.30-5.50.

Another stock in this sector that could find some interest is Move, Inc. (Nasdaq:MOVE). It also has been stuck in a downtrend since 2007. However, it recently set a higher high, after clearing a downtrend line in April. The last few months appear to have been a bottoming process, with MOVE trading in what could be loosely considered a double bottom. It is now in the process of testing the breakout area and could find support here. If it can resume the move higher, then the estimated target for the double bottom breakout would be near $3.30-3.50.

It is possible that this group will catch a bid if YHOO continues to move up, whether due to buyout speculation or some other factor. Others in this sector that may benefit from a rotation into the group include China Finance Online Co. (Nasdaq:JRJC), Travelzoo, Inc. (Nasdaq:TZOO). Even if YHOO falters, it's possible that these stocks can garner interest based on all the money flowing into speculative names recently. Many of these names are highly speculative, so always assess your risk first, and then set your stops accordingly. Do you think these stocks will surge in the coming days, or are they simply experiencing short covering bounces? It could be that they are experiencing a bit of both. Let us know what you think by participating in the Investopedia Community.

At the time of writing Joey Fundora did not own shares in any of the companies mentioned in this article.

By Joey Fundora

Joey Fundora is an independent trader located in South Florida. Joey focuses on using technical analysis techniques to uncover supply and demand imbalances in equities. To see more of his work, visit his site on Stock Chart Analysis.

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