RIMM As a Short Candidate? You Decide
Posted by Blain Reinkensmeyer
December 19, 2007 at 5:00 pm
With Research in Motion’s (RIMM) extensive run this year which included a 3 for 1 split in August, the fact that I am writing a post suggesting RIMM as a possible short candidate is something in itself.
This is pretty easy to see on the chart, and if you have read William O’Neil’s How to Make Money Selling Stocks Short you will get a better idea of what is going on technically for RIMM stock.
There are several factors to take into consideration when looking at RIMM’s chart below. What I am looking at is what RIMM has done SINCE it peaked on November 7th with an all time price of $137.01.:
- The 50 Day Moving Average beginning to downtrend.
- More heavy distribution days than accumulation days.
- Gap down most recently here in early December.
- Notable technical resistance at $110, the 50 MA, and $115ish. Current support at $100.
Click to view, click again to zoom
What needs to be watching moving forward is how RIMM plays with the $100 support and how it handles the 50 day moving average. A great short candidate will be more easy to distinguish three to six months AFTER peaking. Now RIMM might make a good short candidate before February, but nonetheless let time take its toll and see how RIMM’s chart plays out in the coming months.
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Shorting RIMM the day before earnings, especially with positive news out from ORCL and Nike, seems disastrous to me.
Mackey on Fast Money was talking about it today. Yes the chart looks bearish, but there’s also a ton of support around $100 and the fundamentals have been so strong lately. The Curve hit T-Mobile in the Q3, right? I think the new Curve (8310 v 8300) was also intro’d Q3 to AT&T. The Pearl 2 is making it’s rounds. I understand there’s negative sentiment about enterprise upgrades in the coming year, but RIMM is really trying to push into international markets as well.
The chart has been disappointing over the past couple months, but the fundamentals and outlook going forward seem to still favor a growth story for them.
Disclosure: I do own a small long position in RIMM
Like you said, give it time because it hasn’t traded below the 200-d m.a. in more than a year and the 10-week m.a. is still above the 30-week. I never short a stock (longer term outlook) above the 200-d m.a. or with the 10-week above the 30-week.
[...] all day today so I apologize for the lack of afternoon postings today. Yesterday I posted that RIMM could be a short pick in the coming months depending on how it played with $100 support and a few resistance points. [...]