But She's Been Gone Since That Summer

"New Kids On The Block had a bunch of hits
Chinese food makes me sick
And I think it's fly when girls stop by
For the summer, for the summer
I like girls that wear Abercrombie & Fitch
I'd take her if I had one wish
But she's been gone since that summer
Since that summer." Summer Girls, by LFO

It would be quite easy, indeed, for me to pile on to SMCI today, as that AI/chip play craters more than 25% on the back of a 10-K delay and Hindenburg's short report (hit piece). 

However, with NVDA earnings still in front of us this evening, I will reserve judgment until we see the reaction and subsequent pin action on the Nasdaq/AI/chips. 

In the meantime, I view the earnings reaction by Abercrombie & Fitch, below on the updated daily chart, to be highly instructive. You are talking about one of the most epic rallies in a stock over the last eighteen months or so, fetching nearly a ten bagger in that time as the old 1990s popular brand made a stirring comeback. 

Despite beating earnings estimates, ANF is getting drilled today as guidance was not quite as lofty as the market wanted. 

And that brings us to the issue of stocks priced for perfection. I noted this previously, though clearly too early, but it remains very much in play including (or especially) for NVDA tonight. These sky-high valuations and parabolic long-term charts may have taken their sweet old time this cycle moving higher, but that does not negate the bear case long-term at all. Many of these stocks, including COST GOOGL MSFT, and others, arguably reached or are currently at this summer, a point where all future good news is priced in fully, which leaves the stocks' reactions skewed much lower regardless of how the news shakes out from here. 

In fact, the prolonged nature of this cycle raises the risks of more rubber bands snapping violently, just like ANF is doing now even though most are focused elsewhere, on SMCI and NVDA.