NEW YORK (Real Money) -- Sometimes you want to ask, where were Tuesday's sellers? What were they thinking? Why don't they come out and sell now?
Until you realize that the sellers were simply of the hit-and-run variety, blasting out of the S&P 500 futures because the dollar was too strong, commodities too weak, the euro on Greece-related death throes and the Fed too vocal about a shake-and-bake tightening.
On Wednesday the dollar was weaker, commodities did nothing, Greek negotiations had no rancor -- causing Europe to rally hard -- and no one spoke from the Fed.
So, there were the howitzers that didn't fire on the S&P and buyers came out of the bunker to pick up the bargains that the moronic selling created among stocks. Once again, the S&P futures gave you the wrong signal Tuesday because the sellers were strictly violating the Sonny Corleone dictum -- they went to college to get stupid and boy, are they stupid.
It's funny: If the market were really rational on any given day, as opposed to just a pulverized battlefield that alternately draws a truce to clear the wounded, Wednesday was a day we should have been down.
Just to prove that I am an ecumenical guy who is willing to see the other side of the trade at all times, let me give you some reasons why the market should have been down.
First, we got an earnings report from Workday (WDAY), a terrific company with a very expensive stock, that was just flat-out disappointing. Workday, which is the loftiest-valued stock I follow in the information technology sector, gave an outlook that showed a pretty definite slowdown when what we expected was an acceleration.
Worse, the culprit was competition, namely from Oracle (ORCL), which the company said on the call had its act together. That's the last thing a high-price-to-earnings multiple stock can handle.
Despite an acknowledgement of real dog fighting, however, the news did not spill over to other high- multiple stocks as it normally would be expected to do. In fact, the expensive software and semiconductor stocks all advanced, some of them advancing with alacrity. That's just not supposed to happen.
Usually expensive stocks as varied as Salesforce.Com (CRM), Service Now (NOW),Tableau (DATA) on the software side and Avago (AVGO), Skyworks Solutions (SWKS) and NXP Semiconductors (NXPI) on the chip side would take a hit. We got just the opposite. Many of these are roaring including Integrated Device Technology (IDTI).
Plus, we got a totally plausible rumor that Broadcom (BRCM) was in advance talks with Avago. Broadcom's got some terrific technology and has made major advances with Apple (AAPL). Of course, Avago, on the eve of its reporting, roared much higher on the hopes it will be paying a huge price for Boardcom. This market went from being hung over to being drunk in 24 hours. We should just call this one big "hair of the dog" rally.
Second, there's the sad saga of Kors (KORS) -- not the beer, the accessory company. Kors used to be the quintessential high-flyer loved by brokerage houses and momentum travelers alike. Wednesday it reported a not-so-hot number and then gave guidance that was horrendous -- low-double-digit declines in comparable sales. Jeez, there was a point where low-double-digit increases in sales would have been a disappointment for this fashion star. Single-digit advances in comp store sales would have crushed the stock. Double-digit? Just a disaster.
What was the pin action? Nothing. Kors was the equivalent of hitting the one pin and having it and the ball then skip into the gutter. If you hit the head pin, it should send the retailers scurrying with a gigantic roar, a strike or a set up for a next day spare, or at least the goal post split.
Nope, only Fossil (FOSL) teetered on this one and that's directly analogous. What a strong market, aided by Tiffany (TIF), which reported a so-so number but then said it expected to see double-digit gains later in the year. I thought that was a totally puzzling forecast, given that there was nothing to write home about this quarter. But the market, which was full of skepticism Tuesday, is just giddy Wednesday and Tiffany is rallying 10 bucks. Hmm, maybe short sellers targeted this one ahead of the quarter and freaked out? Whatever. But that's pretty extreme.
Believe me, for a moment I actually think this market listened to the Kors call, heard that there was weakness in domestic watches and then bid up Apple on the possibility that the Apple watch is taking share.
Then there's the collapse of the Shack, Shake Shack (SHAK). I think here that sellers got the sobering news that the shackmeister isn't up because the burger's so fabulous and you have to squeeze to get in one -- but that it's just part of a vast short-squeeze that has taken it way higher than it should go.
Spillover to the group? Nah, some up, some down. More important, McDonald's (MCD) decided it's no longer going to report monthly same-store sales. When the sales are fabulous you don't stop giving out numbers. Still, the company's stock is barely unchanged. No burger pin action either.
Or, how about Express Scripts (ESRX)? Here's a company I like very much, own it for Action Alerts PLUS, my charitable trust. It was featured in an incredibly important piece in the Wall Street Journal about how it is holding the line against higher drug prices.
It's pitting drug companies against each other and checking outcomes and acting the way you would expect a strapped federal government might be doing. I read the article and figured, oh boy, people are going to put two and two together and crack the whole pharma complex, from biotechs to behemoth drug companies. Instead, they are having the best day they have enjoyed of late. It is led by Gilead (GILD), of all companies, the one that has the most to lose if cost containers get tough because it's making huge money off its incredibly expensive Hepatitis C cure.
Or how about Biogen (BIIB), which is in a knockdown drag out against a bunch of competitors in the fight against multiple sclerosis? Its stock is jumping high as if it has no problem soaring past the discipline Express Scripts is trying to engender.
Now, I am not making a case for a giant selloff, arguing that Wednesday's action is just plain inconsistent and overly sanguine at best, and sophomoric and silly at its most abject. I am, however, making the case that if, on Thursday, some Fed governor comes on the tape and says the housing market's too strong, or that we are due for a tightening because, well, we are due; or if some German statesman grabs a mike and says, "Achtung, Greece drop dead," we will see this entire rally reverse again.
There are simply no underpinnings to the broader market at all. We are swinging with the whims of the people who went to college to get stupid.
It's funny, on Wednesday, after I said that I wish the Fed would just stop talking and let the market have its way, Carl Quintanilla, my Squawk on the Street partner, asked me if I just wanted to dance until the music stopped, basically hoping to get out while the getting's good.
But here's my take. I am simply trying to encourage people to buy stocks of companies they like at prices they find attractive and then have the conviction to own them through the duration. Instead, I see people buy stocks they don't know and sell them into the futures miasma that literally reverses the next day.
Use these selloffs to do the right thing, not the wrong thing, as counter-intuitive and downright hard as that has turned out to be.
Editor's Note: This article was originally published at 3:47 p.m. EDT on Real Money Pro on May 27.