The market confounds those trying to make snap judgments. There's enough emotion followed by remorse in this joint that it can be stupefying on a day-to-day basis.
Monday was typical of that. The whole post-Brussels experience was one of an almost breathtaking re-evaluation; a processing of the terror that took hours, not days or weeks, but hours, where stocks of companies that were related to anything travel and leisure, from restaurants and entertainment companies to theme parks and retailers, were pushed down by 10 a.m. only to spring back by lunch.
We've had instant reaction to terror events before, but never this instant. It was like a terror algorithm came in to replace the chaos in the market and decisions were undone on the fly.
Individual stocks are getting evaluated and then re-evaluated at lightning speed, too.
Take some of yesterday's biggest wins. Start with Sherwin-Williams (SHW). The stock rallied eight points in the wake of the Valspar (VAL) purchase.
Actually, though, it was in the wake of the wake of the Valspar selloff. On Monday, the stock went from $287 to $272, even as the company paid cash to take out one of its biggest competitors and created a level of synergy that allowed you to raise numbers immediately.
Why did it go down that first day? It's almost as if no one even knows. The purchase and subsequent decline created its own buying opportunity.
Or, how about Mallinckrodt (MNK)? The other day we heard from noted short-seller Andrew Left, from Citron Research, that Mallinckrodt, the specialty pharma play, made Valeant (VRX) look like a "choir boy." The stock plummeted from $69 to $52 in a couple of days' time.
But now that Valeant's going up, what happens? Mallinckrodt comes right back, as it has every time it has been slammed. It's almost as if buyers are saying, hmm, if Valeant's a choir boy, it's now a high demand choir boy, as it has gone up so much, so why not take Mallinckrodt up, too?
Same thing with the oil and oil service stocks. Yesterday, Transocean's (RIG) stock was looking down more than 10% as owners frantically dumped it after the company said not to expect any turn in day rates in the next couple of years. They wanted to sell it as low as $9, because that forecast is worse than just about anyone was expecting. Or at least they were expecting out loud, because when the stock got down there, buyers rushed in. It was an instant re-evaluation of an earlier evaluation based on a belief that one, the first, was emotional while the second was coldly calculated. In the end, the stock was barely down.
Which brings me to today's business: Nike (NKE). Here's a company with a stock that looks to be in freefall, because futures orders, sales and earnings projections are lighter than expected. But how much lighter? Let's see: North American futures are up 10%, not the 11% people were looking for. Overall, Nike had 16% growth in futures orders, while 17% would have pleased. And the company predicted low-teens only earnings growth, when the street had wanted mid-teens. (All Nike info is captured well in this story by our Brian Sozzi.)
That, plus a heavy inventory situation in the U.S., beckons the question whether there isn't real competition coming from Under Armour (UA) and Adidas (ADDYY) that's impacting numbers. This is sending the stock down pretty hard. Then again, it had just run from $58 to almost $65 as the market reverted to going for what I call perfection growth retail stocks in a faltering retail environment.
Will Nike be one of those where there's instant remorse?
I think that this one's a little too big to be turned around in one session. There's too many question marks regarding what really happened in the United States.
But I will say this, in a world where we seem very quickly to forget why we hated something, I wonder, after a long weekend ahead, whether by Monday someone says, "hmmm, how did Nike get below $59? I want in."