Shoulda, Coulda: RIMM

The last RIMM post I had here was late July, for it to break down from $55. Well that happened.

I've been watching RIMM since for several weeks, and I've kept saying to myself, "positive divergence, positive divergence..." in MACD. Despite the analysis of the stock that I read on fundamentals, which are downright dismal, I saw this divergence and I thought "You know what, the stock may pop any time, surprising everyone." And the first target would be $50, I thought to myself just yesterday. Yesterday's close was $45.52.

Well well. It may happen, after all. Research In Motion reported its earnings AH today and it beat estimates. The share price went up 4.54% in after hour trading, to $48.60.

Here's the divergence that I saw and didn't act on it. Oh well. C'est la vie. (Oh BTW, anyone who acted on SIRI, congrats! It took a while but now it seems to be on its way further up.)


If the general market stays up, it may not be too late to buy in. Watch 60-period slow stochastics to see if it crosses above 20 (buy signal). Do your own DD, this post is nothing but entertainment.

(And why don't I listen to my own advice? The whole point of starting this blog was to get it out there so that I would actually see what I think and follow my own advice once in a while...)

Amazon Runs Out of Kindles

(Update 7/28/2010) So RIMM has popped on the news of iPhone killer. I'm not impressed with the move, at least not yet. The stock is yet to take out yesterday's high, which is $55.65. AMZN continues to languish, going nowhere.

-------------------------------

so reports Barron's Tech Trader Daily by Eric Savitz on July 27, 2010. Maybe that's why the stock had a miraculous reversal the day after the earning announcement:

(Quote)
Amazon.com (AMZN) has temporarily run out of Kindles.

Here’s what it says if you attempt to buy the e-Book reader on the company’s Web site:

“Temporarily out of stock. Order now and we’ll deliver when available. We’ll e-mail you with an estimated delivery date as soon as we have more information. Your account will only be charged when we ship the item.”

And what do you see when you go to the Amazon home page? Why, a promo for the extra-big Kindle DX!

As SlashGear notes, the sudden Kindle shortage could mean there has been a surge in demand - or it could mean a next-gen Kindle is on the way.
(Unquote)


That sudden reversal after the earning report has kept my AMZN puts worthless, but I still don't think much of the AMZN chart. Ever since the July top of $124.88 it's on the decline, underperforming the index (Nasdaq). You could say it is resilient, refusing to sell off. But it looks to me like it wants to sell off at any time now. (Of course I'm biased, I have AMZN puts.)

This stock and another Nasdaq beta Research in Motion (RIMM) look to me to be ready to dump. But then the Kindle rumor may be true, and RIMM just announced the iPhone "killer". They may turn on the dime.

RIMM, OCLR Broke Out... DPZ Next?

Well, buying RIMM (Research in Motion) on the breakout at $71 worked like a charm. I am still sitting on the June call options at $70, with 40% gain. So far so good, but it is being taken down AH today on the rumor that Verizon may carry iPhone. (Rats....)

There's another stock I bought recently on the breakout, and that's working too. The stock is OCLR (Oclaro Inc.), which I bought at $2.10. It is hitting a resistance around $2.80, but I am sitting with 33 gain in 3 weeks. Don't ask me what this company does for business. I bought it after looking at the chart. $2.10 was a breakout point

As far as I am concerned as a trader, when you buy a stock on the breakout and the breakout doesn't fail, then the stock market is more likely to be in a bull market than a bear market. Mind you, it's just about the stock market, and NOT the real (by that I mean productive) economy or what's going on on Main Street.

Some junk food (or comfort food, if you prefer) companies are about to break out, probably to the upside, the general market willing. One of them is PEP (Pepsico), the other one is DPZ (Domino's Pizza). Both seems to be consolidating, forming a flat top after having made a significant increase already.

I like DPZ's chart better. It has had similar breakouts from a flattish base twice since last December, and each time those breakout points were never undercut. Could it happen the third time? Looking at the longer-term chart, the stock is at the same level as in August-September 2008, right before the stock market crash. If this level is somehow taken out, the next resistance is $18 - 20 area. If it breaks down below $13.35 (lower support of the current flat base), I can forget about it.

RIMM Waiting to Break...Out I Hope (Not Down)

I know I know you don't trade on hope as everyone says. As I wrote in the last post, the market has been stuck, listless, going nowhere fast. Today I just got really tired of waiting out to see where the market was going, and I bought a stock that I thought was setting up for a breakout. I also took it as bullish that the market so far refuses to break down. In case I turn out to be so wrong and the market crashes from now on, I will only lose money on call options, still 3 months out (June).

I bought Research in Motion (RIMM) after looking at this nice ascending triangle pattern which has been developing for the past 5 months. Technical indicators are not that great, and a beta stock like RIMM depends on where the general market may be heading. I bought on the candlestick pattern potential, not on the technical indicators.



The target of the pattern would be around $86 (height of the triangle $16 added to the resistance level of $70). That would nicely fill the gap from September 2009 when the stock totally bombed on earnings report.

Depending on the market, it could test the lower ascending trendline again before it either breaks down or goes up and test the resistance and break out. If it's the former, it would be very bearish for the stock, to break down from a bullish chart pattern.

If the pattern doesn't collapse suddenly, I may add April calls. RIMM reports its earnings on March 31.