RIMM Inflects off 200 Day – How Far Will it Go?

Bycjrosen

Research in Motion (RIMM) was in the news prominently last week as the stock plunged after slightly missing earnings expectations.  The stock has now found temporary support about its 200 day moving average.  How far will the bounce go?

The logical reaction after a large volatility momentum move down is an inflection (retracement) back to key moving averages, which would be located around $130 per share.  Today’s intraday action has the stock falling back for a potential retest of the 200 day average, which would be a bearish development – violation of the 200 day average would likely be a strong sell signal for funds and other traders who may have stops beneath that key level.

Nevertheless, should price retrace back to the upside, there are a few key price levels to keep in mind:

Again, the $130 per share confluence of the 20 and 50 period EMAs

The 38.2% Fibonacci retracement is at $126.75
The 50.0% Fibonacci retracement is at $130.80
The 62.8% Fibonacci retracement is at $134.84

(These numbers are close approximations)

Notice again that the $130 per share level would seem to favor a strong potential for resistance for this stock in the short-term – that area was also support (horizontal) line previously, and support – once broken – can become resistance.

Keep your eye on this stock and what it might mean for the broader market, and do be careful if you’re trading this highly volatile stock in any aggressive capacity.

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One Comment

  1. Some time ago I commented about Volatility Index and suggested considering MACD to help forecast its future direction: I always find your analysis interesting, including this RIMM’s case.

    Personally, I would expect a crash in the next few days for the whole market, and IMHO this stock could be included.
    As before, I base my assumptions on $VIX’s MACD (well, not ONLY macd but that’s my main variable today).

    At the same time, I think a crash right now would put several good stocks in the “buy me now at bargain price” condition: that would be a very good opportunity, at least short term players waiting to see stock recover and return their fair price.

    Thanks for your clean comments and keep up the good job Corey 🙂

    Panamon

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