Tumblin’ Tuesday – Monday’s Gains Quickly Reversed

So much for that "rally".

We call them "Meaningless" Mondays for a reason as nothing that happens on a Monday is any true indication of market direction – it's usually a low-volume affair that can be quickly reversed.  Yesterday's volume on the S&P ETF (SPY) was 37.8M, less than what we usually have on a half-day of holiday trading.   Volumes have been low for a long time as we topped out in the market and that's very scary as it indicates very weak support below the current prices.  

Things are especially meaningless ahead of the Fed, which is geared up to disappoint the markets unless they give us a 0.5% rate cut, more than reversing December's 0.25% hike that sent the S&P down to 2,346, which is now 22% below our current level.  If your stock is not earning 22% more than it was in November – then why would it not be able to fall back to that level just as quickly?  

Beyond Meat (BYND) has been a market darling since its IPO in May at $25 and yesterday, at $222, they annouced earnings that were fairly ordinary and certainly not indicative of a 1,000% run but it wasn't the earnings that took them down 13% to $193 – it was the announcement that they would be selling 250,000 additional shares to raise $56.5M and that the CEO would be able to sell 1% of his 3,177,922 shares for $8M with lock-ups waived for some of the other big pre-IPO Investors (yes, it's optional, not mandatory – a lockup provision is there to protect the underwriters, not the ordinary shareholders, so it can be waived at the underwriter's discretion).  

Keep in mind, despite their current valuation (not value!) of $13Bn, BYND's IPO only raised $240M by selling 9.6M (16.5%) of the 58.3M shares outstanding because they didn't know it was going to go to $240 in 3 months, did they?  So it's very rational, with the stock above $200, to raise some more cash and it's very rational for the people who originally invested in the company to want to take a little off the table.  It's not usual to change a lock-up period post-IPO, the lockup is sort of a promise made to new shareholders by original shareholders that…
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