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The sun is reflected on a building inside the Blackberry maker's Research in Motion RIM Technology Park in Waterloo April 18, 2012. (MARK BLINCH/Mark Blinch/Reuters)
The sun is reflected on a building inside the Blackberry maker's Research in Motion RIM Technology Park in Waterloo April 18, 2012. (MARK BLINCH/Mark Blinch/Reuters)

SCHIZAS' MAILBAG

Research In Motion is not for the faint of heart Add to ...

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. 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 smartphone space.

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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 investors who continued to hold the stock 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 advisers 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!

Have your own question for Lou? Send it to lschizas@globeandmail.com.

 
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