Lou,

Is RIM a buy at $55 or is it in the dog house.

Thanks,

 Kurban

Hi Kurban,

Right now I would say that Research In Motion Ltd. ( RIM TSX) needs some exciting new developments to jump start a return to an uptrend. The current environment has RIM playing second fiddle to Apple in the smart phone space. Your question regarding an entry point at $55 is interesting and demands further review.

 

 

The three year chart provides ample evidence that RIM has been struggling since September of 2009 where it met resistance at $95.00 and then gaped down. What is abundantly clear is that there is lots of resistance and every attempt to rally is met with selling.

The barriers to a breakout come in at $60.00, $70.00 and then at $80.00. There is also a death cross on the chart that formed in November of 2009 putting a caution flag on the track.

More to your question is where support comes in and if $55.00 is a good entry point.

 

The six month chart illustrates the resistance that RIM has met along its 50 and 200 day moving averages. Every effort to rise has been met by selling. The support level comes at $55 didn’t hold and now the question is will we get a bounce off of $50.00 or do we need to retest $47.50?

The MACD signaled the rise from $50.00 in July  to  resistance at $57.50 at the beginning of August. At this point it looks like the MACD is turning lower which would suggest that we will be retesting $50.00.

I think that until RIM leap frogs over the competition with a knock em dead new product  they are playing catch up in the smart phone space. It will be interesting to see how their management responds and what sort of things that they might be cooking up in their skunk works. But right now there has been muted enthusiasm for the new products rolled out and that has been reflected in the stock price.

Keep your powder dry and remember the best time to buy a stock is when it has established an uptrend. Anticipating a bottom could see you finding new lows with your money.

 

Happy Capitalism!

U.S. President-elect Barack Obama met with House Republican leader John A. Boehner, left, and House Speaker Nancy Pelosi on Capitol Hill on Monday. Source: New York Times

Dear Lou

As a regular listener I do not miss your 06:50 segment on the Oakley Show! Today (January 5th) you suggested that business people must dial themselves into the government’s latest initiatives to stimulate the economy.

My wife’s company may very well qualify for some support from the government and therefore I am willing to help do some research on the matter; which may, in turn, help my family. Would you be able to assist by pointing me to the proper government information packages on this matter?

My wife’s company has two divisions: “Swissmar Imports” & “Swiss Peak”. They import fine European house wares and Swiss Army knives/ Swiss Military watches respectively.

Have a happy capitalism day.

Joe

Hi Joe,

My point today on the Oakley Show was that with the Obama crew about to shovel $775B into the U.S. Economy and the Canadian government making noise about a $30B stimulus package you need to get on the bid lists as a recognized supplier to various levels of government.

Here are three:

The Government of Canada;

http://www.contractscanada.gc.ca/en/busin-e.htm

The Province of Ontario;

http://www.canadabusiness.ca/servlet/ContentServer?pagename=CBSC_ON/CBSC_WebPage/CBSC_WebPage_Temp&c=CBSC_WebPage&cid=1176175892192&lang=en

The City of Toronto;

http://www.enterprisetoronto.com/index.cfm?linktype=mainlink&linkId=99&content_id=466&fromurl=center

Another way to get a piece of the action is to track those who score government contracts and see if you can become a supplier to them. You never know who could use a Swiss Army Knife!

Happy Capitalism!

Hi Lou
I really look forward to your reports on AM640
Is the possible US Government financial bailout much more serious than the one that took place during the saving and loans crisis? If so why?
Looking forward to your comments.
Regards
Paul

Hi Paul,

To my thinking the Resolution Trust Corp was handed damaged mortgages and institutions to patch up and resell into the market.

The Paulson Plan is plagued by the fact that the government will be buying the assets and then reselling them. But at what price will they be buying and selling? Valuation and visibility is what has the market frozen now so it will be difficult to imagine the true value of these toxic instruments. In a no bid market the value is zero.

I am also concerned about the order of magnitude of the problem. Every cost estimate that has been issued by the Bush Administration has been so low as to be laughable. Early last week the estimated cost according to Paulson was hundreds of billions, on Friday $500B was bandied about; by Monday we were up to $750B. It’s like catching a greased pig!

The Resolution Trust Corp solution to the Savings and Loan problem was estimated to cost $20B. The final cost was $122B. As everyone knows I am not that bright but having seen the original version of this farce I think the total cost will be much higher. Earlier in the week I mentioned a $3-4 Trillion cost estimate. I hope I am wrong but with the past as prologue I’m prepared to be less optimistic about cost containment.
Happy Capitalism!