Why Did My Stock Just Die?

Your stock just took a nosedive, but don't panic. First, let's see whether it had good reason to fall. Sometimes, panic-fueled drops can make excellent buying opportunities. With the help of our 165,000-strong Motley Fool CAPS community, we've identified the latest crop of cratered stocks that offer a possibility for profit:

Stock

CAPS Rating (out of 5)

Wednesday's Change

Charming Shoppes (Nasdaq: CHRS  )

***

(12.2%)

Direxion Daily Emerging Markets Bear 3X Shares (NYSE: EDZ  )

*

(10.5%)

Microvision (Nasdaq: MVIS  )

***

(5.4%)

Source: wsj.com.

The devil's in the details
On a day when the market jumped 2.54%, yesterday's declines are big deals. But it's not surprising to see exchange-traded funds like Direxion Daily Emerging Markets Bear 3X Shares, which bet big on the market's decline, fall by significant amounts. Direxion Daily Financial Bear 3X Shares (NYSE: FAZ  ) was down by a like amount; ProShares Ultra Financials Fund (NYSE: UYG  ) was up 7%.

CAPS All-Star mrindependent doubts that Direxion Daily Emerging Markets Bear 3X Shares will be a good investment anytime soon.

Red thumbing this 3 times short emerging markets etf on the theory that emerging markets will continue their march to glory as developed nations languish. The current US stock market malaise is based on the public's sudden realization of the obvious- which is that the US government and most state governments are way overextended to say the least. The inevitable government belt tightening and tax hiking may chill the US economy but it is unlikely to destabilize China, India, Brazil, Russia and other emerging nations.

And plus-size retailer Charming Shoppes swung to a loss for its latest quarter. It went from a $0.04 per-share profit last year to a $0.07 loss this time, the opposite of what analysts thought it would do. Sales fell 2% and it had to resort to discounting merchandise to get it off the shelves. Undoubtedly, that helped the company post a 1% increase in same-store sales. The one bright spot was that Charming Shoppes' e-commerce sales were up 36%.

Despite consumer confidence rising in August, retailers have been circumspect about what the second half of the year might hold. Economic numbers have been revised downward, and even Intel has warned that the back half of 2010 could be weak.

Don't bring me down
Pico projector maker Microvision looked like it was going to make the market highs list as rumors began to swirl -- once again -- that its tiny projectors would be included in the next-generation iPods from Apple. Microvision's shares were actually up 20% at one point, ultimately ending down for the day.

This is a routine occurrence, because back in April, Microvision shares got a boost after the company announced that an unidentified consumer electronics original equipment manufacturer had placed an $8.5 million order for its projectors for a "high-end mobile media player." That set off speculation that either Apple or Microsoft's Zune would be the buyer. When neither one panned out, new rumors surfaced about how they might even want to buy the company. I think that if any company wanted to do that, it would be either Texas Instruments or 3M (NYSE: MMM  ) because they compete against the projector maker.

So Microvision investors should be used to the regular innuendo on the Internet about their company.

However, Apple released its new iPod Touch yesterday, and while the revamped music player includes video capabilities, there's no Pico projector. Maybe the next generation will include one.

Investors remain hopeful, and once someone breaks down one of the music players and finds Microvision's projector included -- someone bought a big chunk of them -- that should cause its stock to rocket once again. That could be why 92% of the CAPS members rating the company believe it will turn in market-beating performances.

You can head over to the Microvision CAPS page and add to the speculation.

Ready for a resurrection
Just because your stock has taken a beating doesn't mean it's going to roll over and die. Markets are known for overreacting. A closer look at what has happened to your stock can give you an edge over other investors who just react to the market's lead.

That's why it pays to start your own research on these stocks on Motley Fool CAPS, where you can read a company's financial reports, scrutinize key data and charts, and examine the comments your fellow investors have made, all from the stock's CAPS page. Then you can decide for yourself whether it's ready to come back from the dead.

Intel, 3M, and Microsoft are Motley Fool Inside Value recommendations. Apple is a Motley Fool Stock Advisor selection. The Fool owns shares of and has written puts on Intel. Motley Fool Options has recommended buying calls on Intel and a diagonal call position on Microsoft. Try any of our Foolish newsletter services free for 30 days.

True to its name, The Motley Fool is made up of a motley assortment of writers and analysts, each with a unique perspective; sometimes we agree, sometimes we disagree, but we all believe in the power of learning from each other through our Foolish community. The Fool has a disclosure policy.

Fool contributor Rich Duprey does not have a financial position in any of the stocks mentioned in this article. You can see his holdings. The Motley Fool has a disclosure policy.


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