Research In Motion Ltd. needs to reverse the current sell off

Mar 11th, 2011 – 2 Comments

At this point the best approach to RIM is to be patient. The prudent investor will want to see the indicators that they follow generating a buy signal.


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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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Hi Lou,

I’ve read some of your past items on RIM and I’m wondering what your thoughts are on RIM these days considering the volatility of the world market (read OUCH the last several days), iPad2 hitting the sales floor Friday, and RIM reporting quarterly earnings in a couple of weeks?

Thanks,

Steve

Hi Steve,

My last post regarding  Research In Motion Ltd.(RIM TSX) was on September 13, 2010  for Wayne. It was just a few days ahead of the release of second quarter results. At the time it was noted that given the sell off that had gripped the stock the best way to play RIM was to wait out the release of the quarterly results. I am a big believer of having the reporting dates for every company that you own or are thinking of owning on your action calendar. The flex point  represented by quarterly results will answer the question of direction for the stock.

 The better than expected results started the stock into an uptrend that saw it ride to $69.00 in February of 2011 from the lows of $45.00 in September of 2010. A better than 50% return in 6 months is not bad, but the key was to wait for the trend reversal to develop. Don’t look to catch a stock at the absolute bottom or sell at the absolute top. Its nearly impossible to accomplish. Get in a bit late and leave a bit early to reduce your risk.

The charts will provide better particulars that should be considered ahead of the next flex point.

The three year chart illustrates the bounce off the rock bottom in September of 2010 and the advance through February of 2011. However the advance has reversed and now the stock has been giving up some of its gains. What is also evident is that there is resistance at $70.00 that is hard to ignore. It should have come as no surprise that the advance would have had to muster up some great strength to get over that barrier.

The six month chart depicts the multiple buy and sell signals generated by the MACD and that it is currently not suggesting that buyers were going to take control of the market for this stock. In addition the RSI signaled the February top as it moved away from overbought territory.

At this point the best approach to RIM is to be patient. The prudent investor will want to see the indicators that they follow generating a buy signal. Currently the trend is down and we have the Q4 results scheduled for release on March 24, 2011.

Lets use the same tactics as back in September and wait for the rumours regarding Q4 to  become news. Even if the results are out of this world there will be plenty of time to catch the ride for a profit.

MAKE IT A MASSIVE WEEKEND AND HAPPY CAPITALISM!

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