(This is an excerpt from an article I originally published on Seeking Alpha. Click here to read the entire piece.)
The management at Research In Motion (RIMM) disappointed this past week as it appears they failed to launch the long-awaited buyback. Who can blame them? It was a week of dour headlines filled with yet more European sovereign debt fears. Even RIMM’s mega-millions may have been wiped clean in a flash if the macro-headlines turned deeply south. The week had its brief moments of excitement, but sellers were quite effective in pushing back every single attempted rally in the stock. RIMM ended the week down 5.0% while the NASDAQ declined 2.5%.
Speaking of sellers…{snip}…It is starting to look like the level of short interest is stabilizing again around current levels. Clearly, sellers are not concerned about RIMM’s ability to prop up its stock.
Source: NASDAQ.com
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Last week, I presented the following scenarios for playing the planned share repurchase…
{snip}
…I realized that there is a “worst case” scenario that could be just as likely as any other scenario. RIMM may have even more bad news coming down the pipe. If so, management would be wise to wait to start buying stock until sellers react by taking the stock down even lower…
{snip}
Whatever scenario awaits RIMM, the chart suggests to me that a big move is brewing. The churn in a tight trading range for the past month has generated pent-up energy translating into a “Bollinger Squeeze.”…
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Chart created using TeleChart
Be careful out there!
Full disclosure: net long RIMM