Tech Titan……Not!

I gave this idea to premium users yesterday before the close. Not the typical 1 day earnings play but earnings can still be a catalyst. Charts are from yesterday. Enjoy. I took it yesterday for $2.83.

Research in Motion, $RIMM reports earnings Thursday after the market closes. It really only makes sense to look at this stock from the monthly chart now as it has been so long since it has traded at these levels. Now approaching support at 14 from 2004 it is currently in a no man’s land area between 20 and 14. Below 14 there is a little blip at 7.50 but support at 5 below that. Will it get

a pop from earnings, perhaps. There have been various rumors on takeovers that have stalled the fall as well. The stock looks broken. If it does pop it looks to run into resistance quickly at 20 at the top. If it disappoints and falls further then under 14 is extremely ugly. The weekly chart is just a strong series of candles lower with a Moving Average Convergence Divergence (MACD) indicator that is near zero and a Relative Strength Index (RSI) that is hovering just under 30. Bearish, nothing to see there. The daily chart is also a flow downward with a chance of short term resistance at 16. But the RSI and MACD on this timeframe also suggest lower. You can buy the December 14 Puts heading into earnings and will likely be rewarded. But it has been beaten up so badly that you risk losing it all on a bounce higher.

Trade Idea: Buy the January 15 Call and buy the February 14 Put.

This play is a bet that will move away from 14, one way or the other. And if the initial move is higher you are likely to be rewarded eventually on both legs. The December Options price in a move of $1.60 by Friday, enough to at least recover the cost of one leg. This trade should cost about $2.80 to enter. If the break is down on Friday it may make sense to sell the January calls on a hard move.

As this Stock was the first trade in the premium service 3 months ago I will be offering this trade to the public after 1pm tomorrow.

If you like what you see above sign up for deeper analysis and trading strategy by using the Get Premium button above. As always you can see details of individual charts and more on my StockTwits page.

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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