understanding exceptions to general rules is important in investing
here we have cramer saying be careful.... normally one would properly and rightly interpret this as a bullish indicator given the well known observation that cramer is usually terrible at forecasting....
however knowing when there is an exception to the general rule is essential here
there was every reason for deck to move up today... just about every stock i own was green. deck however was red... the tape has spoken volumes today
deck is going back to the 50s
so cramer saying be careful is actually correct this time
an exception to the general rule of fading cramer
this time you want to heed his words and wait to the 50s
there will be a time to buy deck again
that time is not now
United, I'm surprised with you. We saw this over and over again with Under Armour. Over the last 36 months, we saw under armour go from 36/share to 165/share(pre-split).
During that time, it had about 7 corrections of 10% or more. Everytime it got ahead of itself, it pulled back decently only to climb back up, set a new high, and then pullback again.
As investors, we get a shmorgasboard of companies of our choosing to invest in. Why is it we don't back all of them? Clearly somebody is holding on to some of these stocks or buying more? because we all make decisions based on valuation.
Someboyd buys facebook for 17 last year because it sold off and they think its dirt cheap. they got a deal apparently. Somebody buying in today will be paying more than 150% more. Same company, different prices. Harder to make the puchase today(which would lead one to conclude that Facebook probably has more room to run just from a contrarian perspective).
but bottom line, in between now and when Deckers becomes worth more than 200-250/share in 36 months from now, there will be rises and there will be significant pullbacks.
We just had a 10% one, it might turn into a little bit more but I doubt it because I think we have an appointment with 85 by April because of the current 10 year rate of 2.71 along with less reliance on sheepskin. Then we might catch our breath run a bit more ahead of ourselves to maybe 100/share(jeffries target), but that will be significantly pricing in 2014 and some of 2015 numbers which wil probably call for a pullback. Or it might not, sometimes the market doesn;t care, one can never know.
Actually if you noticed, Deckers DID IN FACT OPEN a buck higher with the rest of the market.
But then sold off on credit suisse coming out and saying they see Deckers missing this earnings(very possible with the weather warm this time of year).
So if one objectively looks at it from a traders perspective(algorithms and GS make up the volume of the market) then at 63.44 to start the day, when we are a full 4 months from full year results and a possibly weak 3rd q results and potential full year forecast, the stock was PRICED IN earlier today.
The only rational thing from the viewpoint of the traders was to take profit as we are still a few weeks before october earnings....no real reson to get excited due to the government shutdown and warmer temps. They could wait till the day before earnings with the stock at this price or a little lower and going into the earnigns, GET PAID for the miss.
We are in somewhat of a trading range between 60 and 65 till earnings imo. The higher the stock goes, the more TRADERS want to sell because OCtober is priced in but not fully at that price.
Based on even a weaker full year results for whatever reason, stock is worth at least 75/share come february. Why do you think there is so much consensus with the upgrades that came out last week when the stock was at 68/share. They all crunch the same numbers, use the same 10 year discount rate.
But that just prices in this years results(75/share), it has nothing to do with next years and wall street can play things two ways, pricing in or not. WE ARE NOT priced in for full year at this price as I believe fair value for this year is somewhere between 74-78 just like the anaysts who upgraded do.
But I do believe we deserve another 10 bucks for 2014 results as well which takes us to about 85-90/share sometime between now and next year.
what is the tape saying? well folks.... does not look pretty
if deck cannot manage to be green today, what is it going to do on a market red day....
what this says is deck is going back to the 50s
maybe then it will be time to buy again