What do charts say about RIM-t short term(Jun 2011),medium term(end2011) & long term (3 yrs).
The last time I published a post on Research in Motion Ltd. ( RIM TSX) was on March 11, 2011 for Steve. At that time it was noted that the Q4 results were scheduled for release on March 24, 2011 and that it would be prudent to proceed with caution around that flex point. In addition the momentum indicators were not generating a reversal of the downtrend that the stock was in.
With the past as prologue let’s review the charts for some guidance as to potential outcomes for RIM.
The three year chart tells the tale of a stock that has been in a downtrend since 2008. There have been opportunities to catch bounces for profitable trades but as far as a sustained uptrend that has not materialized. The current leg of the sell off started in March when the stock hit resistance at $70.00 and then missed the expectations set for their Q4 results reported on March 24.
After the Q4 release the stock headed south and got a tentative grip on support at $50.00 but then stung investors in late April of 2011 with lower guidance for Q1.
The six month chart provides a better view of the current action in the shares of RIM. There are a number of features worth noting. In late February, 2011 the MACD and RSI both generated sell signals.The stock tried to move up in March, 2011 but met resistance along the 50 day moving average and then got side swiped by the release of their Q4 results.
At the present time there is a death cross that has surfaced and the stock is grasping to find support. The RSI indicates that the shares are oversold so perhaps some buying will come into the market for RIM. Unfortunately the MACD is not suggesting that the selling has concluded.
Regarding your questions on the prospects for RIM. I would never offer a three year forecast for anything. In most cases its a folly and with the speed of change in the technology sector its insanity! When I look at the corporate action calendar for June 2011, the company is sceduled to release Q1 results on June 16. The company has already warned on the quarter so in the best case scenario its probably a matter of better bad news than truly good news.
The trend is down, the momentum indicators are neutral at best,and the street is cutting forecasts and ratings. Not great motivation to be a buyer. Be patient and wait for a move to the upside.