On BlackBerry Eve, A Last Chart Review for RIM: A Mirror Image Of Apple

Research In Motion (RIMM) will change into BlackBerry (BBRY) on Monday, February 4, 2013. It is a change in name that is likely long overdue. I thought I would celebrate by writing a quick chart review that is also long overdue.

I have not written about RIMM, uh BBRY, for almost a year. At the time, I had finally given up hope that the company would begin a new buyback that would propel the shares upward for another bullish trade (see “Research In Motion Officially Acknowledges Its Retrenchment“). The stock fell for another six months until it finally reached a bottom a little over $6 in late September. I think it is absolutely no coincidence that one of BBRY’s main killers, Apple (AAPL), peaked almost at the same time. The sentiment shift against Apple’s “high” price has facilitated “bargain hunting” in BBRY’s “cheap” price. BBRY has enjoyed a rocketship almost tripling its price from the bottom, starting right before a post-earnings pop that sent the stock up as much as 14.8% in one day. Meanwhile AAPL has been humbled with a loss that reached as large as 38% last week.

The churn in BBRY has notably increased ever since December’s earnings seemed to end the bottom-fishing euphoria. Instead, BBRY found support at its 50-day moving average (DMA) and traders/investors found an excuse in RIMM’s coming products to bid the stock back up. On Thursday, BBRY cracked the 50DMA but closed right on top of it. This drop capped a week of selling, presumably from disappointment and/or “sell the news” on BBRY’s product announcement. On the day of BBRY’s official press release on the “re-designed, re-engineered, and re-invented” BlackBerry10, the stock dropped 12.0%.


A rocky yet impressive relief rally for RIMM (BBRY) is still holding its uptrend from the bottom
A rocky yet impressive relief rally for RIMM (BBRY) is still holding its uptrend from the bottom

This weekly chart makes the uptrend line more plain.


The RIMM (BBRY) uptrend from the bottom
The RIMM (BBRY) uptrend from the bottom

Source: FreeStockCharts.com

The trade on BBRY is very simple despite all the noise. As long as it holds support from the 50DMA and/or uptrend line, the stock is a buy (like now). If the stock breaks this line, it is a short. The stakes then are high for BlackBerry’s coming Super Bowl commercial on February 3rd. BBRY is one of the few companies (maybe the only) which is not providing a preview ahead of the game. Another way to trade BBRY is to just set your sights over the course of the year and recognize the stock is likely to provide plenty of bullish and bearish trades, buy some long-dated options, and wait your turn. This worked for me when I bought January, 2014 calls in August of last year and got stopped out in November. With hindsight, I see I should have remained more patient. BBRY had gapped up over resistance at the 200DMA and that line provided firm support on the brief pullback before the stock pushed higher.

Perhaps another indicator for BBRY will be AAPL (or maybe vice versa!?!). If AAPL gets it mojo back, it is hard to imagine traders choosing to buy BBRY over AAPL. As long as the AAPL story is dented and doubted, there is every reason to allow hopes to dream about a resurgent and reinvigorated BBRY. The following charts, a 6-month and a 1-year comparison, show the clear mirror image between AAPL and BBRY.


BBRY versus AAPL for the last 6 months
BBRY versus AAPL for the last 6 months


BBRY versus AAPL for the last year
BBRY versus AAPL for the last year

Source: Yahoo!Finance

Needles to say, whenever I think of my next trade on AAPL, I am going to take a peak at BBRY in the rearview mirror.

Be careful out there!

Full disclosure: long AAPL shares, put spread, and calls

{Post-Super Bowl addendum: The strange BlackBerry commercial: “In 30 seconds it’s faster to show what the [z10] can’t do”}



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