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Plenty of signs on BlackBerry charts, none of them good

The Blackberry flag outside Blackberry 1 located at 175 Columbia St. West in Waterloo, Ont. Another round of layoffs at BlackBerry’s headquarters will trim its staff by 300 employees.

Fred Lum/The Globe and Mail

Hello Mr. Schizas,

Your info on BlackBerry is so outdated! My question to you is: Do you have any position on BlackBerry as a shareholder (short/long), etc.?

BlackBerry is at a very interesting stage right now. I would be interested to see more of your opinion here or on Talk Radio AM640.

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Hey Serge,

Thanks for the assignment.

Just by way of clarification, the way the Mailbag works is in response to a reader asking for a study of a particular stock. What you can surmise is that no one has asked about BlackBerry since my last post on April 12, 2013. At that time Ann, who had bought shares in BlackBerry at $30.00, wanted to know if the company offered a good prospect for a recovery and if she should buy more and average down her adjusted cost. It was advised that averaging down was not recommended. The rationale is that you are better off finding a new prospect than chasing a poor performer with new money.

In response to the question Ann posed about the possibility of a recovery for the stock it was advised that the competitive environment didn't favour the company. It was also noted that the shares were struggling to hold support along the 50-day moving average and that the uptrend that started in September of 2012 had been breached.

Another investigation of the case will inform my current opinion of the risks and opportunities associated with BlackBerry.

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The three-year chart illustrates the gap down on June 28, 2013, as BlackBerry reported a first-quarter loss. The aggressive selling took the shares down to just below $9.00 by late July where it caught a bounce but met resistance along the 50-day moving average near $11.50. There are two other bearish patterns that are worth mentioning. The downtrend line that has been in place since late June and the death cross that surfaced in late July.

The six-month chart provides a close up of the buy signals generated by the MACD and the RSI in late July and the sell signals that formed in early September. At this point the momentum indicators are neutral at best. What you have to take into account in evaluating BlackBerry is that the dominant patterns are the established downtrend, resistance along the 50-day moving average, and the death cross. All of which do not recommend a buy.

You asked if I had a position in BlackBerry and the answer is no. I never write or talk about stocks that I own to avoid any conflicts.

Make it a profitable day and happy capitalism!

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About the Author
Lou Schizas

Lou Schizas is an equities analyst, investor, entrepreneur, professor and television and radio personality - and a true believer in the happiness-inspiring powers of capitalism. More


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