(Editors note: This article was originally published on Real Money Nov. 12 at 6:45 a.m. EST.)
Alibaba (BABA) went down yesterday because it had run so much into China's Singles'Day holiday. Not because it is a bad company or a bad stock or because CNBC's David Faber revealed CEO Jack Ma as a bit of a big-think guy who is more of a visionary than a stock jock. The stock reversed because it had just gone too far, too fast into a big event that was now behind it. There's no doubles' day ahead, or Christmas, for that matter. The blockbuster/door-buster holiday of China, the wedding/Christmas/Hanukkah/Valentines celebration day, has now come and gone.
That's just a fact. That's just how the stock market works. It didn't matter how well Singles' Day went. After that run there was no way expectations could be topped ENOUGH to satisfy the buyers. So the stock took its worst tumble since coming public because people sold it on the event itself. That's a pattern you recognize if you have traded stocks over any brief amount of time. It happens often when a stock runs into the close for a much-hyped bit of news, whatever that news might be. The "disappointment" led to a cascade of selling that continued right into the close.
I want to stick with the stock of Alibaba. I think the holiday sales will cause estimates to be raised and the company's growth rate to accelerate. I am not perturbed about yesterday's reversal. But I suspect there could be more of a shake-out ahead as more hot money exits the building -- again, a common pattern. My target stays at $120, where it is valued similarly to Facebook (FB) .