To represent this I am going to talk about Adobe (ADBE) which is not even one of the 'momo' stocks... they did spike a few weeks ago as Apple (AAPL) agreed to budge on the moat they have built around their applications. But that was a sort of unique one off news event, rather than one of these stocks that is related to the cloud in some manner and hence must go up 18 out of every 19 sessions. However, the company reported solid numbers last night but came in a bit light in revenue guidance. When stocks are priced for perfect "a bit light" means you receive an instant 20%+ haircut in stock price. As I type the stock is below $26 in premarket.
That's one way to fill a gap.
So you can chase, and chase and chase all these names up without regard to valuation or sense, but the window for reality check is coming soon and the risk for the people who only buy stocks because they were up 7 of the previous 8 sessions, increases by the day.
- Adobe's adjusted earnings and revenue for its fiscal third quarter that ended Sept. 3 surpassed analysts' expectations.
- The company said it saw some weakness in its U.S. education segment and its Japanese creative business during the period due to the difficult economy, and that pulled its revenue guidance for the fiscal fourth quarter below what investors were hoping for.
- The company said it expects revenue between $950 million and $1 billion for the current quarter, lower than the $1.03 billion analysts are looking for.