Fiber-optic stocks have been leading the market for months, with hot IPO Acacia Communications (ACIA), longtime industry player Ciena (CIEN) and many others benefiting from an optical "supercycle" of booming demand internet giants, telecoms and China.
But on Tuesday, IBD's Telecom-Fiber Optic group was among those leading the broader sell-off on the stock market Tuesday, falling 3.5%. Acacia Communications continued to break down, while Ciena, Inphi (IPHI) and others fell below buy points or other key support levels.
Acacia Communications
On Tuesday, Acacia got an upgrade from Needham analyst Alex Henderson, who coined the optical "supercycle" earlier this year. Shares initially rallied, but closed down 2.5% Tuesday. Acacia has crashed nearly 21% in four sessions, breaking through its 50-day line for the first time on Friday.
IBD'S TAKE: Check out this Industry Snapshot for an in-depth look at what's driving the fiber-optic last-mile boom.
Ciena
Ciena is a key customer for many of the booming optical components makers. Ciena, along with Cisco Systems (CSCO), are leading the 100-gigabyte rollout for Verizon Communications (VZ).
Ciena fell 4% to 21.42 on Tuesday, dropping below a 21.97 buy point and closing just below its 50-day line. Ciena initially broke past the pivot on Sept. 1, when Ciena reported strong earnings. Shares pulled back, twice finding support near the 50-day line and rebounding briefly into a buy zone.
Inphi
Inphi is classified under IBD's Semiconductor-Fabless group (and one of the reasons why that group fared so poorly), but is benefiting from the optical wave. Inphi shares fell 6% to 41 on Tuesday, closing below its 50-day line for the first time since July 1.
In the prior four sessions, Inphi topped a 44.64 buy point intraday, though it only managed to close above the pivot, barely, on Oct. 6.
Fabrinet
Fabrinet is part of IBD's Electronics-Contract Manufacturing group, but like Inphi also is an honorary optical stock. Fabrinet shares lost 8.1% to 41.79, crashing below a 45.11 buy point though it closed slightly above the 50-day line. Fabrinet tried to break out on Aug. 4, closing below the pivot. But other the four sessions the stock finished in a buy zone.
Finisar, Lumentum
Finisar (FNSR) and Lumentum (LITE) stock charts look better than some of their peers, though they still retreated. Goldman Sachs upgraded Finisar to buy and downgraded Lumentum to sell.
Finisar fell 2.35% on Tuesday, but after hitting a 5-and-a-half-year high intraday. Finisar is greatly extended from any buy point and is well above its 50-day line.
Lumentum tumbled 8.5%, moving below its aggressive 10-day line for the first time in three months. But despite the sharp drop, shares are greatly extended from buy areas and comfortably above their 50-day line.
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