Technicians Are Unanimously Bullish; COUP & SFIX Earnings; Pulling No Punches

It’s amazing how bulled up the technicians are getting. Most of them are convinced that, even after an 82%, 8 month move higher in the NASDAQ fueled by a $3 trillion injection by the Fed, we are only at the beginning of a new bull market that has years and years to run.

For example, The Chart Report’s Chart of the Day yesterday was from Yuriy Matso who projected up the Russell’s current breakout based on the last two which suggest to him that the Russell could reach 2300-2400 in the next year to two. That’s another 24% higher at the midpoint of the range after an 89% move higher already since March 23rd (Source: Yuriy Matso Twitter, December 6, 1:38 pm)

Take a close look at this chart by Grayson Roze which is supposed to show how bullish the currently extremely high breadth readings are (that 92% of S&P stocks are above their 200 DMA in this case). Roze circles early 2004, a few times between 2009 and 2011 and early 2013. But what about early 2007, an instance in which a similar breadth reading preceded The Great Recession? I asked Roze on Twitter and he replied that “It’s juuuuuust barely short of the line “. LOL. Give me a break. If you want to be objective, that data point needs to be included too (Source: Grayson Roze Twitter, December 6, 7:05pm).

What makes this even funnier is the next morning Grayson tweeted about the need for objectivity:

Constantly ask yourself,

“Am I being objective?”

We’re human. We’re emotional, irrational decision makers by default.

But by questioning our objectivity, we can begin to combat the impacts of our cognitive biases.

You’ll be a sharper trader and a better investor for it!

(Source: Grayson Roze Twitter, December 7, 11:27am)

Pretty hilarious to exhibit the kind of confirmation bias Grayson did in his Sunday night tweet and then preach the need for rigorous objectivity the next morning!

Next, I want to talk about Coupa (COUP) and Stitch Fix (SFIX) earnings, both of which reported yesterday afternoon. COUP reported a 31% increase in revenue to $133 million and 18 cents Non-GAAP EPS. They also guided current year revenues to $523-524 million. With a market cap of $24 billion as of today’s close (Monday 12/7), that’s a Price / Sales ratio of 46x. A Price / Earnings ratio of 46x is expensive. I have no idea what to say about a 46x Price / Sales ratio!

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