You can't will it down. You can't say, "oh give me a break, Apple's (AAPL) stock should be down 10%, not 3%." You can't shout, "Walmart's (WMT) stock has to come down 5% on that miss if not more, because we thought that it was doing better than Target (TGT) . "
Oh sure, if you check Jimmy Chill's file, you will see plenty of people who do not have a platform beyond my Twitter (TWTR) file saying it has to happen. Why not? Do you think that there are logs kept about what these people say about stocks -- and if they are wrong, they will be pilloried or put into the Twitter jail?
I am stuck with what the sellers give us. So are you.
And the question is what will the sellers be willing to lose to get out, betting that tomorrow will be worse than today and the day after that and the day after that.
Remember, the sellers in the case of Apple are now simply making a bet on the virus. If the virus is contained, then you buy it down x and you simply have to solve for x, meaning you have to solve what the sellers will give you, as you can't expect the stock to rally on what is, per se, bad news, after the stock is already up so much.
Walmart is harder because both the e-comm number and the comp-store sales numbers, 30% and 2.5%, respectively, are pretty darned good -- and I think warrant a decent multiple. And that is all, thank heavens, we have to solve for here, so we have some comparables. But nothing's easy in this world, with Target at 18x, Costco (COST) at 36x, Home Depot (HD) at 24x and Lowe's (LOW) at 22x. You get a stock down about 16 if you want to give it a Target multiple. A curmudgeon might do that, arguing that a miss is a miss and once missed that puts you into Target purgatory.
Costco is the gold standard. As of this morning, Walmart is not warranting that multiple. Home Depot missed last time and it has crept back to this multiple and is a decent North American comp, but Lowe's with a near miss is also reasonable, albeit it's getting better each quarter.
So what do you get using the low end of the $5.00-$5.15 range? How about $115? That would seem to be your low end, knowing the non-China-based retail pecking order. IF you believe in the top end and you crave domestic, it would not be hard to craft a scenario where you declare it relatively in-line, and low-ball and pay $128.
Now, get back into the head of the seller. He's now seeing the stock in line. Is his reaction to sell? I would say his reaction is to stand pat. And that's how a stock can stop going down and even rally unless the futures conspire to knock it down.
Apple's tougher. It's got both China demand and China supply issues, with the latter spinning off to constrain demand.
What do you do with Apple? You have to wonder about when people in China will go back to work en masse and when people will shop again. Here's a case where you have to believe the Chinese can contain something or they can't. If you are going to get sick at work or at home, in China you are going to work.
That would cut in favor of a return to supply. Demand side will remain weak until people feel safe to congregate. That can't be judged.
So, the words you don't want to hear if you are buying stocks -- fluid and dynamic -- come in to play, which means that you can't solve for the sellers. You literally have to wait to see what they give you and then you can determine what you want to do.
Why not join the sellers?
Well, what do they know? What do they know that we don't?
So why join them? Because we think the sales can't be recovered? Because we think that the Chinese will never go back to work en masse?
I don't want to make that bet.
Let the sellers make it and we will see what they give us.