Active Internet Stocks Help Push Overall Online Trading Up 25%-50% in January

Frenetic trading in Internet stocks pushed online trading volumes an estimated 25% to 50% higher in January, after a 34% rise to a record 340,000 trades a day in the fourth quarter, according to analyst Bill Burnham of Credit Suisse First Boston Corp.

“Spot checks with industry sources confirm that online trading volumes are currently running 25% to 50% higher than last quarter’s record pace,” Burnham said Tuesday in a research note.

The chief executive of the nation’s No. 6 Internet brokerage, AmeriTrade Holding Corp.’s Joe Ricketts, said Monday that his firm’s trading volume grew at the same clip as in the fourth quarter--38%.

Overall stock market volume rose 6.4% in January, but trading in Internet stocks soared 22.4%. Investors funneling trades through cyberspace have a penchant for trading shares in companies that do business on the Internet, such as retailer Amazon.com Inc.

If the trend continues, Burnham expects to raise his profit estimates on two publicly traded Internet companies--AmeriTrade and E-Trade Group Inc., the No. 2 online brokerage--by the end of this month. Both stocks have soared more than 500% in the last four months.

“Given the high degree of sensitivity that these stocks are showing to incrementally positive news, we expect that news of these strong volumes may run the stocks even further, as hard as that may seem,” Burnham said.

AmeriTrade’s stock rose $5.31 on Tuesday to close at $110.31 and E-Trade lost $4.19 to close at $58.25, both on Nasdaq.