Get the Trading Week Started Right With These Names: DROP, DECK, MOTR

Dec 3, 2012 6:16:15 AM PST | 540 View(s) | No Comment(s) - Post a Comment Rating

Technically speaking, the trading week hasn't even started yet, but we can already tell that Deckers Outdoor Corp. (NASDAQ:DECK), Fuse Science Inc. (PINK:DROP), and Motricity Inc. (NASDAQ:MOTR) are going to be serving up the most action early this week. Here's a look at each one, and what traders will want to watch for.

If the name Fuse Science Inc. rings a bell, you may recognize it as the name of the company that Tiger Woods was fronting for back in late October. The energy supplement manufacturer (go here for a full explanation) saw its shares surge from $0.11 to a high of $0.20 in the span of two days in the wake of the attention, which as Bryan Murphy correctly noted is the kind of thing that can put a stock in the map forever. As Bryan also correctly warned of, however, DROP quickly became overbought, and fell back for quite some time.

Great, but what's that got to do with now? The DROP story (and euphoria) never really went away, but the chart and the bulls did need to regroup... which they did, pushing shares all the way up to a high of $0.22 as of last Friday. Finally good - and long-lasting - news? No, not quite. Although Fuse Science shares look like they have a ton of momentum, the pause right at the 200-day moving average line as well as the fact that the stock's so overbought means we're due for another dip. Any would-be bulls may want to wait for another retreat, while anybody who's long may want to take profits and head to the sidelines. The bigger picture is still bullish, but it's time for an ebb following a big flow.

Motricity Inc., on the other hand, has cleared the critical 200-day moving average with Friday's big jump after several weeks' wroth of bullish work. Though a little overbought as a result, the heavy lifting has been done...MOTR has moved above resistance, and also moved on to new highs. Although we're still likely to see some back-and-forth, the odds favor more upside than downside (as long as the 200-day average holds as support).

MOTR provides mobile content, mobile advertising, and content-delivery solutions to mobile service providers; Verizon Wireless is one of its clients. Though it's not profitable (yet), there's a lot of tangible value here ($121 million in revenue last year), especially considering the current market cap for Motricity Inc. is only $39.2 million. That translates into a P/S ratio of only 0.34, or less than 1/5 of the market's average.

Last but not least, a bigger-picture (and perhaps longer-term) possibility....Deckers Outdoor Corp. Technically, the big hurdle hasn't been cleared yet - DECK is still beneath the 100-day moving average line, after failing to move above it with the August/September effort. But, the 100-day line is being tested again, and as of last week, being tested on higher volume. Though there's still work to be done, it's very close to a key break (and the pre-market action actually has shares above the 100-day average line at $40.54).

Yes, DECK is the same Deckers that makes shoes (and some apparel and accessories). Investors have been hammering it all year long, and to be fair, some of it may have been deserved - the top and bottom lines have dwindled in a couple of recent quarters. It looks like the bears may have overshot with their pessimism though, as Deckers Outdoor Corp. has suddenly garnered a ton of favor with the media, the analytical community, and investors. Funny thing about these tidal sentiment turns... once they start, they build on themselves, gathering more of a following (and more bullish sentiment) on the way up. 


James E. Brumley is a paid contributor of the SmallCap Network. James E. Brumley's personal holdings should be disclosed above. You can also view SmallCap Network's complete disclaimer and disclosure.

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James E. Brumley is a paid contributor of the SmallCap Network. James E. Brumley's personal holdings should always be disclosed. You can also view SmallCap Network's complete disclaimer and disclosure.

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