Analyst's Message to Yahoo!; More Downside in Vipshop?
The S&P 500 ETF (SPY) - Get Report is set to snap its six-week winning streak on Friday, which would mark the first weekly loss of the fourth quarter.
On CNBC's "Fast Money Halftime" show, Stephen Weiss, founder and managing partner of Short Hills Capital Partners, said the market looks similar to how it did near the end of summer. Right now, stocks seem slightly overvalued given the slower global growth environment.
Josh Brown, CEO and co-founder of Ritholtz Wealth Management, pointed out how terrible retail is doing -- with big losses this week from Macy's (M) - Get Report , Nordstrom (JWN) - Get Report and J.C. Penney (JCP) - Get Report -- despite the continued fall in gas prices.
Discretionary spending on apparel has certainly been lacking, added Jon Najarian, co-founder of Optionmonster.com and Trademonster.com. The market has come down so far, so quick, as investors fear economic growth is slowing.
"This sucks," Najarian said of the trading environment. But it is creating some buying opportunities too, he added.
Broadly speaking, the market has been in a temporary uptrend, but longer term, it's in "no man's land," Brown said. The S&P 500 200-day moving average is flat.
That 200-day average coincides with the 50-week moving average, which is near 2,060, according to Steve Grasso, director of institutional sales at Stuart Frankel. That's a key level for stocks going forward, but investors are full of uncertainty about oil prices, economic growth and now the Fed.
"Here we go again," said Sarat Sethi, managing director at Douglas C. Lane, on the Fed and the potential rate hike in December. By taking the market lower over the past week, investors are signaling to the Fed that they are anticipating a rate hike, he explained. We'll see how the Fed responds next month.
The conversation turned to Yahoo! (YHOO) , as Bob Peck, Internet analyst at SunTrust Robinson Humphrey, put out a new research note on the company. There are a number of concerns for investors, he said, mostly about the core business, current management and the potential tax hit from the Alibaba (BABA) - Get Report spinoff.
The core business at Yahoo! has been deteriorating, he said, with both revenue and earnings before interest, taxes, depreciation and amortization down significantly since CEO Marissa Mayer took the helm more than three years ago. This is despite the company's $7.5 billion in research and development spending and acquisitions.
Brown questioned whether Yahoo! could turn around its current business, regardless of who is CEO.
"At the end of the day, this just isn't a good business to be in anymore," he said, citing rising customer acquisition costs and falling revenue.
Peck argued that there are some things the company could do to reduce costs and turn around the core business, such as cut new deals with ad companies and perhaps a search deal with Microsoft (MSFT) - Get Report . So far though, Yahoo! has seen nothing but an unsuccessful turnaround.
The panel turned to discuss Vipshop Holdings (VIPS) - Get Report . The stock is down 25% on Friday after the company said it expected soft third-quarter revenue. Shares are now down 33% this week and more than 50% from their 52-week highs.
Of course, that's music to the ears of short-seller John Fichthorn, co-founder and portfolio manager at Dialectic Capital, who back in mid-May called the stock a short-sale candidate on CNBC.
He's sticking to his short position despite the favorable move lower, explaining that if the company is more fraudulent than it is real, it will still have plenty more downside. He questioned the legitimacy of the company's accounting and suggested that the real "answers" cannot be found. He's short other Chinese-based equities too, like Alibaba.
This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.