Dotcom Bomb Keeps On Ticking…
Stack this up as another bad
day for the dotcoms. The sector, in desperate need of good news, gets another
dose of harsh medicine today when Amazon
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AMZN |
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PowerRating) was downgraded by a
multitude of analysts.
As of noon Chicago time, AMZN is down 2 7/8 on 8 million-share turnover.
That’s a far cry from the $113 the bookseller hit back in December of last
year, when its founder and CEO was Time magazine’s “Man of the Year.” I guess
last Friday’s 30-minute outage was just one more reason for the bears to come
out of the woodwork.
Banc of America Securities said they expected their growth rate to “slow
considerably.†Dain Rauscher Wessels raised Q4 sales estimates and kept its
buy rating in place, but that was hardly enough to stop the flood of sellers
from overtaking the stock.
What’s interesting to us is not just the volume of options changing hands in
AMZN, but the dollar-weighted volume, which is decidedly in the bear’s corner.
The put-to-call ratio was approximately 1 1/2 to 1, but the dollar value
of the puts trading was nearly 3 to 1.
Likewise, we’re seeing heavy dollar-weighted put-to-call ratios in fellow
Internet monsters Brocade Communications
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BRCD |
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PowerRating) and Yahoo
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YHOO |
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PowerRating).
We point this out because you would normally expect to see bottom pickers buying
up calls, but in all three of these stocks we continue to see masses of put
buyers.
In BRCD, the put/call ratio is 7 to 1, but the dollar-weighted put/call is 14 to
1! In YHOO the put/call is also 7 to 1, but the dollar-weighted put/call is an
unbelievable 175 to 1! I know I’m repeating myself, but this obviously means
there is serious money being thrown at the puts in YHOO. Our indicators continue
to show bearish sentiment despite the hits these two stocks have taken.
On the brighter side, our indicators have finally stopping showing bearish for
battered CMGI
(
CMGI |
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PowerRating) and are starting to turn bullish! Nothing like
a slide from $150 to $10 3/4 to shake the bears out of the tree.
