uel,
I'd agree with Greg---failed head and shoulders when it traded through the 85 level today. RIMM is one of the few tech stocks which has not been hammered......yet. As you say, the P/E is way, way out of whack with the going rates among the tech stocks. Technicals look terrible, with sell signals across the board:
askresearch.com
RIMM looks bound and determined to follow in the footsteps of its peers, and begin a downtrend. It is now trading below all its major moving averages. Next support about 62, and if it fails there, then I'd say a free fall to 50 is likely.
Of note, there are nine analysts covering, with the last activity there being an upgrade two months ago, in what now appears to have been a last-ditch effort to sucker in the last of the retail buyers before the stock peaked and headed south. Also of note, the last downgrade occurred just before its current run, on June 30 (in what now appears to have been a last-ditch effort to shake out the die-hard retail sellers and pick up some more cheap shares). So, there's lots of room for more downgrades, which could add considerable downward momentum. But I wouldn't count on downgrades anytime soon. In fact, I wouldn't be surprised if these did not occur until RIMM was very close to a bottom, constituting therefore a potential buy signal.
The put/call ratio for RIMM is around 0.85, which is more bearish than the general market (around 0.65), but less bearish than it was when this ratio was peaking (at about 1.15) around the end of September. There is no significant clustering of puts at strikes below today's closing price, but there is a lot of overhead call-related resistance at the 100 strike. Open short interest relative to daily volume has been declining lately as well, and total shares short amount to less than one day's current average volume. My take on all this is that sentiment among options traders is a bit overly bullish, though not excessively so, and not blatantly discordant from RIMM's recent performance. But, that said, there is little resistance to downward price movement from either the short sellers (via a squeeze) or the options pits.
The bottom line is that RIMM has much more potential downside than most others out there right now.
JMVHO, as always........
WS |
