Two high fliers, Netflix and Priceline, took manic leaps yesterday even as a relatively placid Apple gained a not-unimpressive $17. Facebook, for its part, was in a months-long parabola that appeared to have been precisely contained by a technical target hit on Friday. Although these stocks may appear to be headed to the moon, we read it as the blowoff phase of a tech-stock mania that has grown too silly to sustain. Accordingly, we’re sticking with a prediction that the stock market is at or very near a major top. We’ll line up our ducks accordingly — even perhaps loosening our stops a bit — to leverage it.
Interestingly, even Netflix CEO Reed Hastings seems discomfited by the steep rise in his company’s shares. It’s not as though Netflix has been making money hand-over-fist. Far from it. “We have a sense of momentum investors driving the stock price,” he said on a conference call. “There’s not a lot we can do about it.” Unless there’s a massive die-off of morons on Wall Street, however, Hastings is not likely to get much relief from scary euphoria. The Street’s OPM specialists have been binging on the stock mainly because Netflix is now a ‘content’ producer, like HBO, and because subscriber growth has been steady. But equaling HBO’s margins would hardly justify such a ridiculous run-up as NFLX has enjoyed. As far as we’re concerned, the stock’s behavior is evidence of a bubble that has engulfed a handful of hype-able ‘story’ stocks whose success has little correlation to the nation’s economic well-being.