Research in Motion setting up a trade for those with an appetite for risk

Jul 27th, 2012 – Comment

RIM is not for the faint of heart but if you have an appetite for risk and believe that the strategic review being undertaken by management and their financial advisors will lead to an offer that adds to shareholder value this might be a good time to buy.


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Lou,

Another RIM posting is due.

Jay

 

Hey Jay,

This will be the seventh time that I have run the charts on Research In Motion Ltd. (RIM TSX) since my first post for Kurban on August 9, 2010. At the time the shares were trading for $54.93 and it was observed that until RIM leapfrogged the competition with a knock em dead new product they were playing catch up in the smart phone space.

The sixth post was on a request that you made on January 30, 2012 when the shares were trading for $16.80. You were curious as to the potential of a double bottom forming and if it was time to start accumulating the stock. It was suggested that the shares did not support a buy and that until the selling abated and buyers wanted to own RIM it was best to stay out of the fray. Unfortunately for investors who continued to hold the stock they plumbed new depths with their capital.

Another examination of the charts will highlight the risks and opportunities associated with RIM.

 

 

 

The three year chart continues to tell a tale of woe from a capital preservation point of view. A long established downtrend, with a death cross, are only good cheer to investors who are short. The longs have been beaten, burned, and battered for the last two years. You will also want to make note of the consistent resistance along the 50- day moving average in 2012.

 

 

 

 

 

 

The six-month chart does seem to be suggesting that a trade is setting up. The MACD has crossed above the signal line and the RSI is moving out of oversold territory. Prem Watsa doubled up on his position in the stock which may have induced others to follow his lead. If you are tempted to be a buyer watch for resistance at $8.00 and then again at $9.25.  RIM is not for the faint of heart but if you have an appetite for risk and believe that the strategic review being undertaken by management and their financial advisors will lead to an offer that adds to shareholder value this might be a good time to buy. For my money RIM is way above my risk profile.

Make it a profitable day and happy capitalism!

Categories: Telecommunications
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