Research In Motion playing catch up

Aug 9th, 2010 – 7 Comments

Keep your powder dry and remember the best time to buy a stock is when it has established an uptrend. Anticipating a bottom could see you finding new lows with your money.


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RIM

 

Lou,

Is RIM a buy at $55 or is it in the dog house.

Thanks,

 Kurban

 

Hi Kurban,

 

Right now I would say that Research In Motion Ltd. ( RIM TSX) needs some exciting new developments to jump start a return to an uptrend. The current environment has RIM playing second fiddle to Apple in the smart phone space. Your question regarding an entry point at $55 is interesting and demands further review.

 

 

rim2

The three year chart provides ample evidence that RIM has been struggling since September of 2009 where it met resistance at $95.00 and then gaped down. What is abundantly clear is that there is lots of resistance and every attempt to rally is met with selling.

The barriers to a breakout come in at $60.00, $70.00 and then at $80.00. There is also a death cross on the chart that formed in November of 2009 putting a caution flag on the track.

More to your question is where support comes in and if $55.00 is a good entry point.

 

rim3

The six month chart illustrates the resistance that RIM has met along its 50 and 200 day moving averages. Every effort to rise has been met by selling. The support level comes at $55 didn’t hold and now the question is will we get a bounce off of $50.00 or do we need to retest $47.50?

The MACD signaled the rise from $50.00 in July  to  resistance at $57.50 at the beginning of August. At this point it looks like the MACD is turning lower which would suggest that we will be retesting $50.00.

I think that until RIM leap frogs over the competition with a knock em dead new product  they are playing catch up in the smart phone space. It will be interesting to see how their management responds and what sort of things that they might be cooking up in their skunk works. But right now there has been muted enthusiasm for the new products rolled out and that has been reflected in the stock price.

Keep your powder dry and remember the best time to buy a stock is when it has established an uptrend. Anticipating a bottom could see you finding new lows with your money.

 

Happy Capitalism!

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