Zacks’ Voice of the People Highlights user globlchrtanlysis: “Is RIMM Forming the Pattern of Death?” from the People & Picks community.
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Is RIMM Forming the Pattern of Death?
Research in Motion (RIMM) appears to be forming the “pattern of death,” and it could get especially ugly for this stock if the overall market doesn’t break out of its downtrend soon. Chart patterns like the one RIMM is forming are reminiscent of August/September 2008 just before the slide.
Why does the RIMM chart look so bad?
The old support levels broke severely, and those levels have now turned into a wall of resistance. RIMM not only gapped through its old support but after giving us a weak, dead cat bounce, it was smacked right back down without much of a struggle. When the sellers are lined up at old support levels turning them into new resistance levels, this tells us the bears have a firm grip on this stock.
RIMM will most likely test its old lows again at $47 and doesn’t really have much support again until it reaches the $37 level again.
For those interested in shorting RIMM, our first profit target would be at $47 with a stop around the $58 level. The overall market is hitting even heavier resistance and if it continues its expected slide and tests the July lows, stocks with bearish patterns like RIMM will get the worst of it and should easily slice through their near-term lows.
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