Last night I was looking through Alexa.com, checking out the traffic patterns for some of the websites and blogs that I visit regularly.  As usual, my mind quickly started thinking about ways this information could help me in my investing.

Is it possible that a pure-play internet company's traffic directly corresponds with their earnings? I mean, if your entire revenue stream is derived from your website, wouldn't it make sense for your revenues to track your traffic? And if revenues tracked traffic, wouldn't stock price?

So I took a closer look at two of the largest companies I could think of where internet sales accounted for almost all of their revenues: ebay (EBAY, Inc) and Amazon.com, inc.

First, look at EBAY's 6 month web-traffic chart:

45,000 down to 30,000 (visitors per million internet users)....that's a 33% drop. Now look at the EBAY stock price over the same period:

From $40/share down to $25. A 37.5% decrease. Hmmm.

Now let's look at Amazon's 6 month web-traffic chart:

Pretty much the same numbers as EBAY---45,000 down to 30,000, a 33% drop in traffic. Now check out the stock chart for the same period:

AMZN dropped from $38/share down to $26/share, a decline of 31.5%. I think I might be on to something! Wouldn't it be great to have sold short both of these stocks as their Alexa charts dropped?

That was the end of my study (it was late). See if you can find other examples where Alexa charts of an Internet company show a definite trend--does the stock price follow?

Andy Swan is co-founder and head trader for DaytradeTeam.com.  To get all of Andy's day trading, swing trading, and options trading alerts in real time, subscribe to a one-week, all-inclusive trial membership to DaytradeTeam by clicking here.