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  • Monday's Most Disliked Stocks - SIGM, FNSR, BRCD 0 comments
    Jul 7, 2009 12:43 PM | about stocks: SIGM, FNSR, BRCD
    Sigma Designs, Finisar, and Brocade were booed off stage
    Though the broad market ended up salvaging Monday's trading session, for Sigma Designs Inc. (SIGM), penny stock Finisar Corp. (FNSR), and Brocade Communications Systems, Inc. (BRCD), it was a day that couldn't end soon enough. A combination of technical, fundamental, and sentiment measures have pegged these three tickers as the market's least desirables. Here's the story on why they stunk.

    Sigma Designs Inc. (SIGM)

    The 6.7% tumble for the day sent a loud and clear message out that sitting on a ton of cash ($5.40 per share, with the stock trading at $14.31) isn't enough of a reason to hold it blindly. Well, there's that, or perhaps it was the run from March's low of $2.00 to the recent peak of $8.00 that's prompted the sudden change of heart. There are a lot of profits to be taken after all.

    There was no news, but the underground buzz is that bad news - perhaps a warning - is on the way. That's just the word from the message board pumpers and bashers (bashers in this case), though they have been known to be right on occasion.

    Either way, SIGM looks like a breakdown candidate now.

    Finisar Corp. (FNSR)

    There was no news behind Finisar's 7.5% tumble either; perhaps downward momentum was enough to keep the sellers active, and inspire new sellers to jump on the bandwagon... FNSR has fallen from $0.89 to $0.49 over the last three weeks. Support is nowhere in sight.

    In the near-term I have to think this penny stock's implosion is creating a bearish self-fulfilling prophecy. Longer-term (if the analysts are anywhere close to right), I think Finisar could be an exceptional value.

    Trade for the short run, invest for the long run, and always know the difference... especially with penny stocks.

    Brocade Communications Systems, Inc. (BRCD)

    Traders fell out of love with Brocade despite a spot of good news this morning. Brocade's routers were chosen by Denit Hosting. No word on the dollar amount, but it's better than a sharp stick in the eye.

    So why the 4.8% dip and a gathering of a raucous crowd with pitchforks and torches ready to lay into Brocade? This is likely to be one of those cases where a stock was just in the wrong place at the wrong time. Jo Biden's ill-advised wording coupled with an overbought BRCD chart just popped a bubble that was overdue for popping.

    As for what's next, the message boards stink of desperate bullishness.... a fairly good contrarian indicator. Here's one of the posts for Brocade that we found particularly amusing:
    "MMs (money mamagers) are reading this board and are trying to get us to sell so they can load up before management breaks radio silence they don't want the retail investor like us to make money they know we are on to something here and ruining their accumulation plans...BRCD will close above 8 this week watch and learn"
    First of all, no, money managers are not reading message boards. Second, money managers don't care if you make money or not - they only care if they make money or not. They're not about to follow a lead set by some anonymous poster (one who speaks in absolutes, no less).

    If it were just this post we'd probably overlook it. The sentiment is pretty prevalent on the boards though, suggesting the amateurs are the ones piling in now.  That's not a bullish scenario.

    Information and commentary like this are great, but unless you can turn it into money, it doesn't matter. If you want to turn information into specific, actionable stock picks, then sign up for our free newsletter today.

    Sign up at www.smallcapnetwork.com

    Stocks: SIGM, FNSR, BRCD
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