And the trend is certainly prominent in the mergers and acquisitionssector. Vignette announced Monday that it had signed a pact to acquireOnDisplay for $1.7 billion in stock. This represented a hefty 32% premiumfor OnDisplay holders. It was the sort of news that once would havetouched off a buying spree in shares of the target company. So whathappened? Shares of OnDisplay traded at $54.125, up a puny 87.5 cents in 4p.m. Nasdaq trading Monday. Then Tuesday, OnDisplay plunged $8.0625 to$46.0625 in 4 p.m. trading.

It wasn't long ago that when the operating principle among technologyinvestors was "buy the rumor -- and the news." But the sentiment has shifteddramatically. And the recent squeamishness among investors suggests thatit could be difficult for the markets -- particularly the tech-heavy Nasdaq -- to muster any sustained rallies for some time."Last year the market wasso euphoric and exuberant that it was looking for any excuse to buy, and apress release was a good one," says Henry Blodget, Internet analyst forMerrill Lynch. "Now the market is looking for any excuse to sell."

Gauging how investors respond to news is a classic way of reading investorsentiment. In a bull market, investors respond positively to good news. Ina bear market, investors use any strength generated in a stock frompositive news as an opportunity to sell. Last year's roaring Nasdaq marketraised that concept to a new level, however. It wasn't just good newsinvestors responded to -- it was any shred of news at all, no matter howsignificant. The question now, with Nasdaq in a bear market, is whetherinvestors will be just as indiscriminate in their "selling the news" asthey were in their buying.

"The markets have glommed on to these releases as a source of liquidityboth on the upside and the downside. When information becomes ubiquitousand trading costs become zero, anything becomes an excuse to buy or sell,depending on that day's Zeitgeist," says Stephen Galbraith, a strategist atSanford C. Bernstein. "And today, the Zeitgeist is sell," he says.

Until recently, positive news releases became one of the most populartactics among technology companies interested in generating interest intheir shares. The strategy was so successful that an inverse correlationdeveloped between the number of news releases a company issued and theaverage length of time its investors held its shares, says Bernstein's Mr.Galbraith.

E*Trade Group, for instance, issued a press release roughly every day and ahalf, in 1999 through November, he says. That was roughly four times thenumber of press releases thatMorgan Stanley Dean Witter released during thesame period, Mr. Galbraith says. Meanwhile, he says, E*Trade investors heldthe stock just two to three weeks on average, compared with the roughlyone-year holding period for Morgan Stanley investors, he says.Mr. Galbraithsays he focused on the relationship between press releases and stock priceafter Track Data, which gained a reputation for rapidly spewing out newsreleases, released a press release saying -- get this -- there would be nopress release one day last year. Now investors are becoming more fickleabout press releases. Last Friday, for instance, Sycamore Networksreported third-quarter net income that handily beat analyst estimates.Investors punished the company's shares anyway, driving them down 12% intrading that day.

Remember when shares of Yahoo! soared 50% on its way to being added to theStandard & Poor's 500-stock index? In a particularly dramatic example ofthe new psychology, Veritas Software actually fell 20% when it wasincluded in the S&P 500-stock index on March 31.

Part of the explanation, according to traders at the time, was that hedgefunds controlled by George Soros were rumored to be selling shares ofVeritas, one of its biggest Internet holdings. It also didn't help thatVeritas shares were also under pressure from arbitragers because of arestructuring at Seagate Technologies, which owns a big stake in Veritas.In any case, the episode came as a shock to arbitragers and hedge funds,which had been betting that Veritas's shares would have the same kind ofrally as Yahoo.

It is all a far cry from the way things were only a few short monthsago.

-- The Wall Street Journal