Oddly enough, the very thing that I try to avoid (earnings) is what I am hoping might put a bid under this market.
Typically if a stock get crushed prior to earnings, that crushing blow is already “baked” into the numbers. The stock rallies and a vicious short squeeze ensues. In rare times, a stock gets crushed into earnings and the earnings confirm what people feared most: a horrible decline in profits. This leads to a final rout in the shares, something that will leave longs scarred for the rest of their lives.
Give the recent “pullback” in stocks like FEYE, down 47% over the past month on no news, one might surmise this company is on the verge of a catastrophic earnings miss. Should they beat estimates, one might also surmise that the stock is going to get a “full erection” post earnings and commence to offer “surprise sex” to all of those who are short.
What if they miss?
With the stock halved from its highs, it’s entirely possible that the stock might rally under any circumstances. It all depends on the mood, quite frankly. Will risk appetite come back? Will America’s $55 trillion in personal net worth be put to work or will funds suffer redemptions?
During many market panics, share prices got compressed to ridiculous levels, most of which resulted in tremendous buying opportunities. The key, as always, is to stay in the game.
Having said that, let’s take a look at the earnings calendar and see if we can glean into their upcoming reports and determine whether or not earnings shortfalls are “baked in.”
CRTO: major player in online advertising, second to Google’s Adsense, is the first of the recently destroyed stocks to report on 4/14. I believe the fate of the high growth stocks is going to be greatly affected by how the stock responds post earnings.
After CRTO, here are some other stocks to watch, one’s that are scheduled to report early in the reporting season (listed in chronological order).
ATHN
AMZN
ANGI
AWAY
LL
N
NFLX
TWTR
WETF
WYNN
BIDU
CREE
The billion dollar question is this: If CRTO misses estimates, will the stock get crushed again, or is it down enough to warrant dip buyers to step in? My guess is it has all to do with guidance and if the guidance isn’t apocalyptic, these stocks will be bought, regardless of what the numbers say.
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MU crushed ER and then shit the bed some more. But I hope you’re right.
MU isn’t down 30% over the past 2 weeks.
In regards to FEYE the company has compounding year over year revenue and are in an industry that is suspected to have a market cap of $80-$90 billion. All analysts notes have been saying great things in regards to growth while claiming the 2014 revenue estimate of upwards of $400 M is conservative. With this sell-off we can only assume that someone wants shares on the cheap or the growth prospects are not there. I hope it’s not the latter.
jules, do you think there is any cred to the zerohedge article point that this is “a furious unwind of levered positions” …and the $GS comment – “The recent momentum reversal has focused on high growth stocks, many of which are constituents in our hedge fund basket”
So highly leveraged hedge funds are doing a dumpathon and shitting each other…and us.
http://www.zerohedge.com/news/2014-04-06/hedge-fund-slaughter-continues-here-who-unwinding-and-what-stocks-watch
Sure, most of the growth stocks are 100% winners, wouldn’t you take profits at 100%? Don’t forget someone else is buying up the shares. Unfortunately we won’t know what’s up until these companies report earnings, as Fly suggested. Hard to say if this “high growth” sell-off is for telling a greater macro economic concern, like a Chinese debt crisis. Bonds have been making higher lows but I would get concerned if EEM rolls over.
I’ve been thinking for the last two weeks now that TWTR will do exactly what you’re saying in this blog post – rip higher – on any sort of ‘okay’ numbers & guidance.. Definitely a Buy now back near ipo levels imho.
On the matter of competing stocks. Who would be FEYE’s or SPLK’s competition? Obviously the cloud and social media stocks have a few.
*High growth competition?
any cloud or application software companies will do. N is going to be a huge tell.
Thanks.
You need to take some time away.
FEYE is UP over 15% this year!!! It’s doing GREAT in 2014!
FEYE is doing much much better than the SP500, Dow or any other index this year. It still needs to go down a lot before it even is doing as badly as the SP500 or the other indexes are doing this year.
If you held this since Jan 1 (just a few months ago) then you are still crushing the market this year.
Steel ass
The ytd returns on a trading stock is meaningless.
Haven’t you people ever invested before?
my point is, even with the massive selloff in the momo names over the last month, they are all still up very strong for the year. They could flatten here and trade sideways for 9 more months and still be up 15+% for the year.
YTD does matter.
The selloff isn’t overdone when you look at it this way. Seems like an orderly sell down of overbought conditions.
I’d buy WYNN. But I might be just saying that since I’m typing this message from their luxury suite… I know I contributed plenty to they’re earnings this week.
Nasdaq through the floorboards tomorrow.
I’m putting my Top Hat on again
Supreme elegance for the evening ball, Ladies and gentlemen
The butler will tend to all your needs
RELEASE THE FUCKING KRACKEN!
Guidance has been the key in many of the stocks performances after ER. Look at TSLA – they guided up huge and were rewarded for it. GOGO beats but but guidance was short of expectations and the stock dropped. APOL same thing. Tough to predict. Any stats available as to how many stock advanced/declined after earnings this quarter?
Prepare for death, then hades
Who’s better than you Fly?
tomorrow is going to be bad….i closed everything on friday and am now in wait for much lower prices mode. Might not happen, but i do not want to miss it when it does.
Although my long term portfolio is all in EWZ since last Monday.
fly do you believe that the PPT is flawed at this time?
no not at all…
Ppt hasn’t flagged an oversold signal in a long time.
Gator
Is your mother still a prostitute?
fair question
The problem is, the market, a la S&P, is near all time high, not in the panic stage as per OA’s sentiment chart. I fear if the market does go into panic mode, all issues will experience the exodus, regardless of prior history.
fly guarantee that if you said that to my face you would be in serious fucking trouble…want to meet up somewhere?
Gator
Sure lets meet up. I’d enjoy nothing more than to rip out your spine and toss you off a cliff.
I shouldn’t have brought your dear mother into this troll fight of ours gator. I’d be satisfied with a fair fight.
Weapons of choice? I prefer to fight with clawhammers if that’s ok?
sure,,bring your soon to be ex-wife
.
… both of you need to relax and get a pedicure ! IMO
.
You know what else is “baked in”? All the good news of low interest rates, Fed accommodation, copious amounts of cash on the sidelines, no other alternatives to get a good return, blah, blah, blah. The market is due to correct over 10% before this is all said and done.
At least you wee not still in PRAN Fly
http://youtu.be/CMNry4PE93Y
FEYE volume pocket down below…..$43 anyone?
No, I want a death match with gator. Name the time and place and we can get this show started.
.
… “death match” seems a bit extreme !!!
Maybe you two could challenge each other to a “Buffalo Wing Eating Contest” !
.
Death match. 100k on Fly for a “Flawless Victory”.
^^another kisspenis leave flys penis alone, chessman will be pissed.
MORE IMPORTANTLY
u ever consider that maybe gatorsun wrestles gators ? Didya?
Gee, I dont know, mabe deep down I’m afraid of any apex predator that lived through the K-T extinction, physically unchanged for a 100 million years bc it’s the perfect killing machine, a 1/2 ton of cold-blooded fury, w a bite force of 20,000 Newtons, and stomach acid so strong it can dissolve bones and hoofs.
But nah, u didnt think of tht.
I didn’t think of that because I really don’t give a shit.
Looks like The Fly should have stayed in BALT after all. Hehehehe
The funniest thing I find about all of this is that people don’t realize that valuations matter. All that matters is if you can draw a straight line of support or resistance or a trendline. WHEN A STOCK TRADES AT A $14 BILLION MARKET CAP WITH ONLY $162 MILLION IN UNPROFITABLE SALES WTF DO YOU THINK WILL HAPPEN? Witness FEYE. Just goes to show that some people never learn.
Platinum J u sexy I’m ur boyfriend now
Will FEYE bounce? Sure it could. But you can sure as heck bet it goes sub $30.
FEYE been long dickin these fish so hard they now pee sitting down.
But u a lady sugartits so I’m inclined to agree, we goona share this long hard lottttsa CoCKAs 4 u road together
Bring vino
Fundies do matter, as does share structure. Consider all those small cap companies where traders predict a huge bounce on the chart, only to find there are millions of warrants or options in the money just above current share price. The chart doesn’t tell the whole story.
MON beat earnings on Thursday, it popped but gave it all back on Friday. Unless some Central Bank Coke is out there (BoJ I am looking at you), that should be the pattern. IMHO Economy is all fucked up and if Coke Dealers are gone…well…bye bye market…finally.
^girl u basic
Player, Not Basic, Sapiosexual
Prop the Market with ETF buys?
then there’s that free trade deal with Kanuckistan < How could they possibly lose!?!
Worried more about add Stimulus, probably coming in July. LOL, yep, how can they loose by buying up the market with ETF Buying..
The hatred for FEYE is close to the obsession hatred of gold. Could FEYE be the one? Cramer rapes FEYE everyday, in fact twice a day! What is so outrageous about FEYE?
Old mo is most likely dead. For a long while. GOOG CRM PCLN AMZN even the pos AAPL. Those stories are older than Alf. But the others? The momo generational shift will be worked out. How is that for no value added?
The war on women is true. Just ask FEYE.
Sometimes I feel like Otto in repo man.
U remind me of J. Frank Parnell
Easy. Cowboy. Just stay a good little socialist you will do just fine.
Good to see the
Gent Jennifer around these halls again. It appears I attract all of the finest men.
Futures took a dump
The Nikkei did not do that bad tonight. No clue if it counts, but it did.
like earnings ever matter for the stocks mentioned.
Gartman is a fucking idiot. Listening to him spew his ass talk is worse than getting water boarded. How did that moron ever get a following?
Honest abe is growing on me
Somehow my EWZ appears poised to climb today
I implore everyone to buy hard. This market is going bounce.
Sincerely,
Rong Xu
The fortune tellers say we end negative today…