It's both the senior growth and the junior growth stocks that are still flashing red, even after yesterday's late day comeback.
Here's the visible ones.
First, Trifecta Stocks portfolio name Disney (DIS) . Have you noticed on any negative day that Disney's stock always looks like it is on the verge of a big break, something our own Robert Moreno signaled could happen? Same with Nike (NKE) , which, I presume, must still be having problems in North America, and Action Alerts PLUS charity portfolio holding Starbucks (SBUX) , where the action makes you feel that U.S., which was weak, hasn't come back. On good days, doesn't it always seem that these three go up $0.27 and on bad days they go down $0.48?
It's torture. It seems like almost every rally never gets you back to even. Tantalize, and then crush.
Then there are the companies like Acacia (ACIA) and Twilio (TWLO) , the quintessential junior growth stocks that did IPOs earlier this year. Both of these companies preannounced much better than expected quarters -- I mean, dramatically better -- but almost simultaneously they announced secondaries. And while the first was good news, even great news, the second was an invitation for a short-selling disaster because shorts flew in despite the estimate raises that the good quarters precipitated.
Acacia, the telecommunications equipment company, priced its secondary down $10 at the same time as the preannouncement and the stock bounced up from there intraday and looked solid.
And then it just fell apart, crashing through $100, where the deal was priced. It proceeded yesterday to go all the way down to $88, still above where it was for the previous breakout quarter back in August, but well below the secondary price.
It wasn't much different for Twilio. It announced a secondary after a huge run on much better earnings and then preannounced sharply better than expected numbers before the secondary and yet it still can't get out of its way. The shorts are having their way with the stock.
Both these 2016 IPOs now feel very 2014-ish when you had sliver equity offerings -- both Twilio and Acacia were very small IPO deals -- which then created a pop and further buying as well as intense shorting: 46% of Twilio's float and 27% for Acacia.
The secondaries, rather than create opportunities for covering, which is what happens in a healthy market, now look like opportunities to double down on the short. That means no respite for the two hottest junior growth companies in the market.
So, the high growth stocks and the senior growth stocks are both heavy. Sure, Ulta (ULTA) broke the mold yesterday with its $27 run after a great analyst meeting. I think it can go higher. But it still isn't back to where it was, which causes the shorts to be emboldened. I think they will be back today.
You see, the fact is that growth has holes in it right now, and the holes are like sink holes. The ground looks solid and then boom, there's nothing underneath. That's what's plaguing the sliver stocks. It might be what's plaguing the senior growths, soon, too.
For me, a lover of growth, this is where the rubber hits the road. These stocks are too visible to break down without causing the entire tape to look heavy. It's as if they have a grave responsibility to the entire market, and they are doing nothing but letting us down.