Chart read: Interclick

In my last Interclick post I was looking for a pullback to enter.  Now the stock is in a very vulnerable position similar to many small cap growth names.  The weekly chart shows it has broken it's somewhat generous trendline that has held since the 08' crisis.  It also has broken all key weekly and daily moving averages.  The RSI and MACD indicators also show that there is more downside to come.  Those signs clearly tell me to stay away from this stock until conditions improve. 

If you are interested in owning this stock for longer than a few hours use a very tight stop.  I would simply wait for much better prices.  The prior support levels I will be watching are 5.05, 4.60 and 3.40.  I suspect this stock will take another big beating as the market continues lower. 

Note: I have no position. 

AuthenTec

AuthenTec’s (AUTH) business is all about identity based security i.e. fingerprint sensors.  They sell sensor chips and software solutions for business applications, computers and mobile devices.  I am interested in AUTH because of my thesis that unlocking items with your thumbprint will become more convenient than the traditional pass code.  I also believe that as online security issues increase people will perceive use of your thumbprint is safer than alternatives like passcodes. 

 In the most recent quarter, smart sensor sales rose 9% sequentially and they specifically mentioned in their 10-Q they are starting to see the adoption of fingerprint sensors in the U.S. Smartphone market.   http://sec.gov/Archives/edgar/data/1138830/000143774911003040/auth_10q-040111.htm  (pg 20, Challenges and Risks )

With the proliferation of NFC, mobile wallets and applications using sensitive data and personal information biometrics can’t be too far behind can it?     

Here are some questions I have to challenge my thesis:

Do people really want to use their thumbprint for simple things like unlocking their phone? – It would be quicker, easier and well suited for the real-time junkie generation we have created.  

Will they oppose it because of they think the technology isn’t dependable? – The product has to be very high quality with almost no erroneous readings or it could quickly fail and be pushed away by the mass majority.  What could you do you do if you can’t unlock your mobile wallet at the store?  

 Will consumers be more concerned about protection or just being able to use their mobile wallet? – Again having a product of the utmost quality is the key here. 

In summary, biometrics like AUTH’s fingerprint sensors will become widely accepted as this technology improves and proves to people that it is dependable and easier to use.  Maybe the most powerful driver behind this trend is people fearing and believing a passcode is more vulnerable to theft than their thumbprint.  I have no position in AUTH, but may look to start one after I find evidence that they make a quality product and the mobile universe evolves.  For some basic stock information here is their Finviz link http://finviz.com/quote.ashx?t=auth&ty=c&ta=1&p=d

Breaking down Interclick

Interclick (ICLK) provides solutions for data-driven online advertising through display and video advertising platforms.  Scanning the ST50 charts I noticed some unusual activity in the chart over the last 3 months.  After doing some research on the stock I have found some useful info:

-          They posted 67% Y/Y revenue growth in Q1 11’ over Q1 10’.  These revenues were down 40% sequentially due to seasonality but still slightly above expectations.  The company expects 40% revenue growth for the fiscal year.

-          This week volume surged as investors and funds learned ICLK will be added to the Russell 3000 on June 24^th. 

-          From April 14^th to June 3^rd Discovery Group I, LLC accumulated 1.35 million shares or 5.5% of the company between 6.72-7.00.  This explains why even though the market has corrected, ICLK has held up extremely well and there now is a huge floor in the stock price.   

Now to the chart:

-          The stock is currently significantly above the upper BB.  Every time this has happened it has been hammered. 

-          The daily MACD is pointing up but the weekly has yet to confirm with a bullish signal line cross.  A test is imminent. 

I don’t have a position in ICLK and would not try to chase this right now.  I will look to enter a swing trade after some consolidation.  A good entry for that trade could be around 7.15 but we'll see how things unfold.