GPS drop today was based on an accelerated short term move up of ~30% since May and a resulting overreaction to the downside due to the August SSS disappointment. GPS has been a pure momentum play over the past 90 days but the reaction today is similar to at least 2-3 other times since late fall '02 when either SSS #s or earnings have come out (albeit a bit more extreme because the run-up was also more extreme and somewhat speculative).
My technical analysis on the stock indicates that the stock should stabilize around the 50 dma @ ~ $19 over the short term. This should be followed by a move to "fill the gap" from the drop between $18.18 and $21 (yesterday's close) over the next several weeks. GPS' ability to move higher than $21 will be predicated on future sales/earnings performance through year-end.
Shorts should take solace in this extreme drop and consider covering since the last couple of times this pattern occurred for GPS it did not stay down long all. Longs should understand better that GPS was inevitably going to consolidate (probably down to this same level) but you're taking your medicine all at once versus a prolonged consolidation period. You should also appreciate the fact that you're still in the money if you've been holding over the last 3-5 months.
Lastly, GPS' fundamentals are still intact and now the "Street's" expectations will be more reasonable and in line with overall GPS performance. The current market run-up overall is indicative of folks trying to make up all of their losses over the past 3 years at once, resulting in "unusual" plays on momentum stocks. You can bet that there will be other stocks that are punished over the next earnings reporting cycle if they disappoint.
As for GPS, I'll still hold to my prediction of $23 - $24 by year-end....
P.S...keep with the facts and drop the vulgarities hurled at each other! Hell, we're all in it to make money, why the insults?
Displays the cash flow. Haven't checked the formula it uses but says it comes from Edgar Online.
GPS has 2 more qtrs of easier "earnings" comparisons due to the completion of the tax penalty. Correct? Reporting period, February 04, should be noticed.
Still sidelined. Watching what politically unfolds. Inflows haven't let up. Have no idea where inflows are coming from. I don't have any guts to buy anything, either. Many companies are already pre-announcing to the upside. Wow, when was the last time we heard that??? And yet they still won't expense stock options. The Stock Option State, California, is acting as if they did nothing wrong and tech stocks are on helium.