U.S. equities were little changed on Thursday ahead of Friday’s big payroll report.
The headlines were filled with chatter from Federal Reserve officials — who were forced to shut their mouths ahead of last week’s policy meeting — and quickly made up for lost time by blabbering with aplomb. Nothing significant was said, just a lot of hemming and hawing about the June rate hike.
In the end, the Dow Jones Industrial Average gained 0.1%. Treasury bonds were up, the dollar was better, gold lost 0.2%, and oil gained 1.2% on supply concerns from a wildfire near Canadian oil sands and political tensions in Libya.
Technically, market breadth continues to narrow sharply despite the lack of movement in the major averages overall. The percentage of NYSE stocks above their 50-day moving average has dropped below 70% from above for the first time since November — signaling the start of the first new downtrend in six months.
As a result, watch for a possible downside move in these three charts: GoPro Inc (NASDAQ: GPRO), Fitbit Inc (NYSE: FIT), and Nike Inc (NYSE: NKE).
GoPro (GPRO)
Shares of GPRO — makers of the HERO line of action cameras and purveyors of the idea that your life can be extreme, documented, and shared on social media too — have been suffering a gnarly wipeout from the post-IPO peak of nearly $100 in late 2014. Shares closed at just $10.71 on Thursday and GPRO is now down to $9.67 in pre-market trading. You can do the math.
A turnaround now depends on the success of the upcoming Karma drone which, unfortunately, the company just announced it was delaying along with a deeper-than-expected Q1 loss of 63 cents per. Revenues dropped nearly 50% from last year to $183.5 million.
Results were impacted by an $8 million charge for inventory write downs and marketing development. The Karma delay plays into the impression that the company has a problem rolling out new products vs. incremental improvements to the existing HERO camera form factor.
Fitbit (FIT)
FIT shares dropped nearly 19% on Thursday after reporting better-than-expected Q1 results but issuing disappointing Q2 earnings guidance. The maker of popular fitness tracking wearable devices reported a 50% year-over-year increase in revenues to $505 million. Yet Q2 earnings-per-share guidance of between eight and 11 cents per share missed expectations as management warned of the need to spend to “deepen its competitive moat.”
All of this played into fears that increasing competition in wearables will diminish FIT’s profit margins and growth rate.
Nike (NKE)
NKE shares are on the verge of a breakdown below a three-month support line near $58 as recent consumer spending data suggest some retrenching by shoppers as the savings rate rises. Moreover, all six retail companies reporting April comp-store sales missed expectations (L Brands, Zumiez, The Buckle, Costco, The Cato Corporation, and Fred’s). Moreover, Aeropostale became the latest retailer to file for bankruptcy protection as Americans snap their wallets shut.
NKE’s weakness comes despite a fiscal Q3 earnings beat (55 cents vs. 48 cents expected) but a miss on revenues.
Anthony Mirhaydari is founder of the Edge and Edge Pro investment advisory newsletters. A two-week and four-week free trial offer has been extended to InvestorPlace readers.
