Perhaps, at last, the bar is too high.
Last night we got two stellar quarters from two amazing companies, Tesla (TSLA) and Microsoft (MSFT) , and both stocks came under selling pressure Thursday. Microsoft was down from the get go. Tesla rallied huge, at one time up about 100 points, and then just got hammered.
Is this it?
Are we finally sick of the great Nasdaq stocks? Is that what the stock of Netflix (NFLX) was saying when it sold off after a remarkable quarter, but paltry guidance?
We may be in a Mr. T situation, the legendary moment when he forecast "pain" for Rocky when he played Clubber Lang in "Rocky III."
I say that, because these stocks all trade together and when you kick off the season with such disappointing price action for one of these brethren, unless the rest of the stocks get crushed between now and then, Pain will, indeed, pain will be an accurate prediction.
First, let me say that Netflix did have a fantastic quarter, but Reid Hastings took down expectations big-time and it crushed the stock. Tesla put up a set of numbers that were gorgeous, but when the stock reversed, we started hearing about how it was a government-aided number.
If you go on the Microsoft call, you are going to hear analyst after analyst praise the quarter. That said, we heard there was hair on the Azure, it's fast-growing web services, and some complained about the strength of the Windows forecast.
Now let me tell you the truth. Years ago, I got to go on an aircraft carrier, the Harry S. Truman and, in one of the most thrilling things I have ever done, I found myself next to the officer who guided planes to land on the tarmac. A pilot has one goal when he or she is landing one of those behemoths: to slow the plane just enough to make it stop before it goes over the edge.
The guide would focus on the plane and would tell the pilot whether he was coming in right. Periodically he would say, "You're coming in too hot," and that meant he would have to fly over the carrier and try again.
It did not mean there was anything wrong with the pilot. It didn't mean that there was anything wrong with the plane.
And that's how I feel about these monsters that take up more than 20% of the S&P 500. They are all coming in too hot, except there are no do-overs.
Now, the question is, will they come in too hot and go right over the side or will they manage to pull out and live to play again.
I think they will all live to play again. I think, despite the warnings of Goldman Sachs (GS) , Apple will be fine. Alphabet's stock is actually cheap, but it could easily find a way to screw it up because it don't play for the quarter. Facebook? I don't know how it doesn't sell off, because the long knives are always after CEO Mark Zuckerberg. And the bar for Amazon (AMZN) ? The highest it has ever had and yet it, too, doesn't play for the quarter. They are all coming in too hot, especially with antitrust hearings coming up next week on Capitol Hill.
So what do you do? What I am about to describe is not easy. You are going to have to take some pain to own these stocks right now. You are going to have to watch the rest of the market come up to them, while they go down in value. But then you are going to have to do some soul-searching, because these are the best companies on Earth and owning their stocks has always been challenging. Maybe you are good enough to flit out and then flit back in and flit out and then flit back in when the tarmac is less slick.
But my suggestion is, go listen to the calls, recognize that there is and will be nothing wrong, it's just that the stocks are too high for now and coming in too hot. The fundamentals have nothing to do with the sell-off. The problem is, they had nothing to do with the last 10%-15% of the stocks' run, either. Which is why that's what might be lost during this tumultuous period where the lesser planes come in just right.