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EPS100Momentum (73.58)

Momentum Upside Down



May 06, 2014 – Comments (8) | RELATED TICKERS: FEYE , WFM , YELP

This means that the market has restarted the Momentum shift of selling all high fliers which either have forward PE's in the triple digits or no forward PE at all to speak of.

FireEye proving this momentum shift in the afterhours, and you can't hide in companies that are actually earning money either as witnessed by RGR today and by WFM.  Whole Foods in afterhours is being decimated like its another money losing internet stock like Yelp or Twtr, no pun intended. 

How long this negative momentum shift lasts is anyone's guess but my guess is probably until mid July. That is usually the hostorical start of the summer rally but I will not be holding my breath.


8 Comments – Post Your Own

#1) On May 06, 2014 at 9:35 PM, EPS100Momentum (73.58) wrote:

Zulily in afterhours added insult to injury by raising guidance and investors said so what and sold it off by -17% in afterhours trading.

Now even a raised guidance is not good enough. Will they also sell off buyouts too? 

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#2) On May 06, 2014 at 10:18 PM, TSIF (99.97) wrote:

More under the hood on Zulily that what was apparent, but you are correct, when relative good news results in a bad outcome then the market is in a mood.  What's surprised me about the sentiment shift is that the money so far is not coming out of the market, it is moving around.  Despite all the sector selling the indexes are still near high limits. Broad based selling will be the tell.  Overall, however, I'm not sure where you get the mid-July summer rally....I haven't heard of that seasonal trend. I see bad sentiment if this gets rolling through September. 

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#3) On May 07, 2014 at 1:06 PM, awallejr (57.24) wrote:

I actually like what is going on, it is the workings of a secular bull market, supported by the Fed's low interest rate policy.

People should be concentrating on companies that actually make a decent profit.  WFM deserved to get hit hard, they keep guiding down and telling you that they are losing to competition.  That isn't a company I would want my money in.

As for FEYE and the whole "cloud" and "social media" gang, it seems the public truly learned their lesson from the dotcom bust.  The retailer simply didn't come in this time to bail out the professionals by buying them at the top. And I think that is a good thing.

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#4) On May 07, 2014 at 2:07 PM, TSIF (99.97) wrote:

I agree, WFM deserved their cut.  I just downthumbed them after they were down 20%, rare for me.  They are BEGGING analysts to downgrade them, which is actually quite commendable.

Regarding investing in companies that have a decent profit, it has to be maintained, WFM lost their moat. I do differ with awallejr in that there is some philosophies, though I understand not everyone, that a company does not need to be making a profit today to justify a slightly higher valuation if they are growing the business, but the margins and increased sales needs to support it.

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#5) On May 07, 2014 at 5:33 PM, awallejr (57.24) wrote:

Oh I don't mind investing in companies based on future expectations.  But I view those as speculations, which I do devote a portion of my portfolio to.  What I don't like about all these new IPOs is how the insiders and market makers are going about it.

They sell a small portion hoping to get the price to climb then come lock-up expiration the insiders dump.  What happened with FEYE is inexcuseable. I just watched BK challenge the CEO on Fast Money.  I certainly wouldn't trust anything that CEO says.  ATPG and Paragon taught me an expensive lesson.  Stay away from a stock if you have concerns about management's veracity.

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#6) On May 08, 2014 at 12:42 AM, DukeMontrose (26.08) wrote:

As a newbie fool trust this is appropriate space to comment on

AMZN . With all due respect I have a totally contrarian opinion. It appears the 19 analysts who cover AMZN, every one has a buy (or better)  or hold rating, not a one has a sell rating.! Thus, this fool is outvoted 19 to 1!

The same crew had about the same ratings 4 months ago. AMZN since then had a better than 20% haircut = ergo for at least 4 month these analysts were wrong - so much as to their lack of independent or balanced stance as a group

To introduce a wee hilarty for my fellow fools, here are their price targets for AMZN. Mean = $419.33 (note decimal point), Median $425 = High $500. So much for their professionalism.

Disclosure: I published online my first switch reco of 2014on Apr 24:(A switch involves selling i stock + reinvesting proceeds in 1 or 2 others ) which I reiterate NOW

>>>Sell AMZN $299( PER 470+) Buy AAPL $ 596 (PER 14) and/or SDRL $35 (PER 6.3, note decimal point) with 11% yield<<<</p>

 This fool believes all responsible CEO's sould have a Reserve for Contingencies for emergencies. These tend to pop up at the most inconvenient times. For AMZN the contingency has arrived + bezos is caught with his pants down. Just after guiding a LOSS  for Q2 (+ maybe beyond).

AMZN's contingency is the impending arrival of  Alibaba in America. This fool is convinced it is an existential threat -  if not to Amazon = certainly an existential threat to AMZN's insane PER.

Compare Alibaba's billions of profits per year with AMZN's which some call a rounding error. Also consider the implication of that for the incoming showdown at the OK Corral..

Am I a total fool believing that AMZN stock is in free fall, unitil it gets below $100. Based on the premium Dow Jones stocks 16 PER,  is AMZN a shaky $10 stock?


As a parting foolish  idea = has Bezos lost control over his budget i.e is he COMPELLED to spend billions  on "investments" - a classic case of running fast to stand still? Translation = he has no choice but must keep up with the competition (which is not standing still).


Now I'm ready to be shot down in flames.


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#7) On May 08, 2014 at 2:10 AM, awallejr (57.24) wrote:

I never believed in AMZN.  The only person who made money was the CEO,  He got paid every year despite the fact that the company has lost money every year.

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#8) On May 08, 2014 at 2:13 AM, awallejr (57.24) wrote:

P.S.  absolutely buy SDRL.

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