High growth does trade together. It's a fact, and the trigger is usually one or two stocks back to back, surprising to the upside or downside.
If you go back to the first week of February, you will find one of the worst tech selloffs I can ever recall, the one-two punch of Tableau Software (DATA) and LinkedIn (LNKD). If you remember, at the time both companies painted a picture of a softening economy, although Tableau pretty much told you that it would all be in stride -- talk about being too calm -- while LinkedIn did sound a real economic alarm.
Now, Tableau Software had a pretty dramatic deceleration of orders and we still can't figure, one month later, whether it was orders lost to others or if there is just some execution issues. But the idea that somehow the cloud has slowed for them is truly not the case, because it is an analytics company that happens to be involved with cloud-based companies, it is not a cloud company.
LinkedIn is a cloud-based company with analytics, worldwide, social, reach, and cognitive qualities all on a mobile device if you want it, with a huge and faithful following.
Those two knocked the stuffing out of every company in tech, whether it be FANG¿Action Alerts PLUS holding Facebook (FB), Growth Seeker name Amazon.com (AMZN), Netflix (NFLX) and Alphabet (GOOGL) -- or salefsorce.com (CRM), Workday (WDAY), Red Hat (RHT) and Adobe (ADBE), four actual cloud-based companies.
This was a real humpty-dumpty situation, and there was no way that you could put all of these companies' stocks back together again without concrete proof that the cloud and cognitive data and mobile and social -- all of a piece -- weren't dead.
In fact, most of the tech followers I know took it to mean "we are going into a recession, and it's even affecting the fastest growing companies."
Now, fast forward to last week. Salesforce.com was slated to come in with a weaker quarter. Why? Because of Linked in and Tableau Software, that's why. The rumors persisted that there was something very wrong going on and that business just had to be weak. Again, total extrapolation.
Then, when the company reported, it was a monster. But, again, people figured, OK, Benioff got it right. Nevertheless, he had to be the outlier. There was no way anybody else could do those kinds of numbers.
Well, that proved to be wrong; Workday delivered fabulous numbers. Truly great. And that one-two punch ignited the group.
It's funny, I know that you would think what would Workday and Salesforce.com have to do with Facebook, Amazon, Netflix, Google or Adobe or Skyworks (SWKS) or Apple (AAPL), for that matter.
The answer is that they are all treated as if they are the same by this market. All of these stocks were crushed by the LinkedIn-Tableau Software battering. Now they are all being lifted by Workday and salesforce.com, as people recognize that the slowing economy isn't taking down tech, it just took down LinkedIn and Tableau Software.
It's almost as if people have forgotten why they sold them to begin with. And why not? There was no reason to do so in the first place.