Research in Motion Ltd. does not support a buy

Jan 30th, 2012 – 1 Comment

At this point I have to maintain my stance that the risks outweigh the opportunity.


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Well Lou, is it time to take a look at RIMM…..I’m thinking a double bottom could start to form over the next few months….or should we start slow dollar cost buying.

Jay

 

Hi Jay,

This will be the sixth time that I have run the charts on Research in Motion Limited (RIMM NASDAQ). The first time I looked at the stock was on August 9, 2010 for Kurban.

The shares were trading at $54.93 and it was advised that the company was playing catch up with the competition and that the stock was in a downtrend that started in 2009. It was also cautioned that anticipating a bottom can result in the unkindest cut of all, finding new lows with personal cash. Unfortunately that was precisely the right call.

The last time I examined the case for RIMM was on October 21, 2011 on an assignment from Bob. The shares were selling for $22.61 and the analysis suggested that the stock was neither a buy nor a hold. Again the right call but no less painful for investors who continued to hold.

Let’s take another run at the charts and see if the worse is behind RIMM.

 

The three year chart is one of those rides that make me nauseous just looking at it. When you are holding a stock in a free fall you have to gird your loins and sell.

The downtrend that started in March of 2011 is still in place as is the death cross that formed in May. Clearly there have been plenty of opportunities to sell and preserve capital.

You asked if a double bottom could form in a few months. It is possible but I would want to see it and not anticipate it. The failure to hold support at $20.00 is a real concern.

 

The six month chart illustrates the bounce off of the December 20th low of $12.45. Most of the advance was fuelled by takeover rumours. When the management changes were announced January 23, 2012 it did nothing for the stock.

At this point I have to maintain my stance that the risks outweigh the opportunity. Until we get a double bottom or some other indicator that the selling has abated and buyers want to own RIMM I would not be stepping into the fray.

Confirm the bottom, don’t anticipate it.

 

Make it a profitable day and happy capitalism!

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