Saturday, 11 August 2007

RIMM Shot

Once in a while, something so obvious reveals itself to the technician. The latest issue happens to be Research in Motion (Nasdaq:RIMM).

The maker of the Blackberry has been on an uptrend since Aug. 2006. It gaps up in end-June to the $200 level and has been there ever since. Looks like the happy days of RIMM are numbered.

It seems that the consolidation that RIMM is going through is the head & shoulders top formation. Although it's a bit short in time frame, it still looks valid. We have diminishing volume that accompanies the formation. The neckline is situated at $210.89, which was broken on Aug. 10, 2007. The downside minimum target for this is $183.06. But we also have to note that the 50-day moving average could serve as a support at $198.85.

The MACD has been showing us bearishness since end-July and it is still accelerating downwards. Since the neckline has already been broken, it is safe to presume that it is on its way to our minimum downside target.

With the way the US market has been reeling from the credit sector problems, those who decide to trade this could find another winner waiting in the wings.

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