The weakness in the shares of Research In Motion (RIMM) persists despite the company’s apparent initiation of its share buyback program on November 9, 2009. Two weeks ago, I used intra-day trading action to suggest that RIMM launched its share buyback program. Overall daily volume surged for three days along with price. The stock then stopped cold directly under the 200-day moving average (DMA) and volume snapped back to “normal” levels.
Within six trading days, all the buyback-related gains were erased. Friday’s close completed the roundtrip with a close under under Nov 9’s low. In my earlier post, I also claimed that RIMM’s buyback pattern from 2005 suggested that the dollar volume from the three days of buying indicated RIMM had finished its buyback activity for the fiscal quarter. So far, this roundtrip action seems to confirm that assessment. The fiscal quarter ends November 30th.
The chart below chronicles the trading action in RIMM:
*Chart created using TeleChart:
This quick resumption of weakness does not bode well for the stock or the near-term success of the buyback program. With earnings still three weeks away, there remains plenty of time for a test of the November lows before the next stock-related catalyst. On a rebound, I will be looking for another failure at resistance from the 50DMA which is sloping rapidly downward. The 200DMA is likely to turn downward within another week or so.
Be careful out there!
Full disclosure: no positions