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.

Dow 5-day Chart: Ascending Triangle?

It looks to me like "ascending triangle" formation over the two days. Usually the break is to the upside, but since today is a quad-witching day I don't think it will happen. But who knows? It's Mercury Retrograde, after all...



(If a breakout ever occurs out of this pattern (if this is an ascending triangle pattern, that is, LOL), the target for Dow is about 100 points up from here, bringing the index very close to 10,000. DISCLAIMER: I am not not qualified to advise, recommend on the stock market, and this is only for your and my entertainment.)

EOD (end of day), the crooks otherwise known as market makers and specialists, managed to end Dow Jones Industrial Average right on the dot on the lower ascending trendline. The ascending triangle formation is still intact, which may or may not be significant, as this was a quad-witching Op-Ex (option expiration) day.