Nokia Corporation faces resistance at $10.00

Aug 4th, 2010 – Comment

I think that it is pretty clear that you have to find entry and exit points if you are going to get on this ride.


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Lou Schizas is an equities analyst, investor, entrepreneur, professor and television and radio personality – and a true believer in the happiness-inspiring powers of capitalism.


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nokia

Hi Lou

Has the Nokia stock received a TKO or is it a “knock out” blow?

Regards

Provash

 

Hi Provash,

I’m not sure what your interest is in Nokia Corporation(NOK NYSE) but you would be best advised to be very cautious when laying your money down. The stock has been shredding value since 2008  so its not a  candidate for the buy and hold approach to investing. The best outcome for investors when considering a stock like this is to trade it in channels and look for bounces.

Nokia recovered from the lows of the tech wreck in 2000 establishing support in the $10.00 range and resistance at $40.00. The current woes at NOK have to do with their lack of competitiveness in the smart phone segment that is now dominated by Apple Inc. ( AAPL NASDAQ), with Research in Motion Ltd. (RIM TSX) chasing the leader.

nok

The three year chart illustrates the sell off that started in late 2007 and the death cross that formed in April of 2008. The stock hit a rock bottom in March of 2009 and bounced to resistance at $15.00. From July of 2009 to July of 2010 the stock was range bound with support at $12.50 and resistance at $15.00. NOK cycled through the range twice then breached support at the end of April 2010 when its first quarter results disappointed.

 

 

nok2

The six month chart tells the tale of the gap down on the first quarter results and the fall below its 50 and 200 day moving averages to $12.00 by April 24, 2010. From there we saw a steady decline to $8.00 by the end of June of this year.

The stock did catch a technical bounce off of $8.00 and has fought its way above its 50 day moving average. Both the MACD and RSI generated signals that the downtrend was on the verge of turning at the beginning of July.The recent advance faces resistance at $10.00.

I think that it is pretty clear that you have to find entry and exit points if you are going to get on this ride. As far as knocking out NOK I would say that you would be better off asking what internal injuries has it sustained in the battle for a piece of the smart phone market and can it recover.

Happy Capitalism!

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