Gavekal Capital: Adidas: Tripped Up by Guidance?

Wednesday, March 5, 2014

Adidas: Tripped Up by Guidance?

While European Retail Sales results pleasantly surprised on the upside today (+1.3%yoy versus expectations for -0.4%yoy)...


Adidas shares fell ~3% on strong volume:


In spite of solid 4Q results, investors seem to have been spooked by less than amazing forward guidance.  In any case, today's decline will likely violate the 45-degree bullish support line that we depend on in our point-and-figure charts:


When a stock begins to underperform (for whatever reason) a benchmark, it is important to take note and consider the potential implications.  In this case, the next level of support is quite a ways away (at row 'e') and would constitute a 25% or so underperformance.