Barclays Capital is feeling pretty good about the Internet sector, as it lifted its rating for the group today from "neutral" to "positive." Barclays cited strengthening fundamentals, despite near-term effects of the slowdown in the economy. The brokerage said increased usage and dependence would leave the sector well-positioned when the macroeconomic environment improved. "We recognize that growth is slowing, but we believe the Internet still remains an area of secular growth," said analyst Douglas Anmuth in a note to clients.

Caught up in all the joyful feelings is Blue Nile (NILE: sentiment, chart, options), which was lifted from "equal weight" to "overweight" because the brokerage firm believes the web retailer has a structurally solid business model, which could strengthen as competition continued to struggle.

Overall, Wall Street is feeling less than enthusiastic about the shares, as Zacks reports that they have earned 1 "strong buy" rating, 4 "holds," and 3 "sell" ratings. This configuration leaves ample room for additional upgrades, which could help to boost the stock.

Meanwhile, options players are extremely pessimistic when it comes to NILE. The Schaeffer's put/call open interest ratio for the equity stands at 1.16, as put open interest outweighs call open interest among near-term options. This reading is also higher than 75% of all those taken during the past 12 months. In other words, options players have been more pessimistically aligned toward the shares just 25% of the time during the past year.

What's more, the International Securities Exchange (ISE) has reported an increase in put trading. During the past 10 trading days, the ISE has witnessed an average of 15 puts purchased to open for every 1 call bought to open. This ratio of puts to calls is higher than 94% of all those taken during the past year, underscoring the growing pessimism toward the shares.

Technically speaking, the stock is up more than 5% this afternoon. NILE is pulling away from its bullishly crossed 10-day and 20-day moving averages, but is still facing resistance at its declining 10-week trendline. The security has not closed a week above this moving average since the beginning of October.