RIMM is highly followed and I had a reader ask me about it in an email. I mentioned a few weeks back about trading it after the big drop when it reported earnings. It is now sitting at an expected support level at about $61.
The fib line makes the support level clear. You can see the support from February 2009 as well as the gap in April 2009. RSI is at 28 so the stock is oversold but not extremely oversold. So this all sounds pretty good.
The bad news is that the stock has sliced through the 50, 200 and 300 SMA at the $65-66 level. This was prior support. There was also horizontal support at that price level. This $65-66 is now resistance.
I think it is possible that might get a technical bounce (especially if the major indexes bounce off their 50 day SMA), but I only estimate that it will get you $3-4. Meanwhile, if this sucker breaks support right here that April gap is likely to fill meaning a trip down to $50.
So my conclusion is that the risk/reward at $61 is not favorable and I’m not going to trade it here. A Potential trade to look for in the future is a retracement back to $65 and a short entry looking for that drop to $50. Alternatively, if it drops to $50 within the coming days, the stock should be very oversold and I would want to buy it at that level for a technical bounce. Also note the support at $55 so an immediate trip to $50 will likely get a stop there first. I would have to look at it again if it consolidates at $55.
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