I’m thinking of getting in on BlackBerry. What is your opinion?
Thanks for the assignment. This will be the eleventh time since 2008 that I have inspected the charts for BlackBerry Ltd.(BBTSX). The last time was on March 17, 2014 for Mark who was looking for a fresh eyes survey to review the situation. The shares were trading for $10.32 and the research indicated that BB had caught a lift off the December 2013 lows and had settled into a trading range with support at $10.00 and resistance at $12.00. The company was scheduled to report its Q4 results on March 28 and it was advised to trade the stock in the range until there was greater clarity as to direction.
By the end of the month the stock broke below $10.00 and went on to test support near $8.00 a number of times through April and May of 2014. From there BB started a new leg up that took it to a 52-week high of $15.10 in January of 2015. But that was all it had to give. Through this year there has been a persistent downtrend in place. The company is scheduled to report Q3 results on December 18 which will provide further clarity as to investor sentiment.
An examination of the charts will inform my thoughts on this investment.
The three-year chart illustrates the resistance that has come in along the downtrend line and the moving averages throughout 2015. The stock was oversold in late September attracting investor interest which took it up and through the 50-day moving average. The move higher ran to near $11.00 where it met resistance along the 200-day moving average.
The six-month chart depicts the buy signals generated by the MACD and the RSI in early October as the shares caught a bounce off of support at $8.00. The situation at hand has the stock oscillating between the 50 and the 200-day moving averages.
BB doesn’t pay a dividend which makes it a stock that has to deliver growth in order to move the price higher. The company which was once a leader in the smart phone segment is struggling to get the market excited about its handsets. What the research has uncovered is that the company is transitioning into a software provider with a focus on its core strength of secure communications.
I would advise caution ahead of the release of the Q3 results next month. By then we should get a better sense sustained buyer interest in stock.
Next time I will investigate the situation at Sierra Wireless Inc. (SW TSX) for Mirella.
Make it a profitable day and happy capitalism!