Research In Motion ($RIMM): Strong support at $35


RIMM has break its support at $42.72 and is now poised to head towards the lows in 2008 (around $35).

This is a fairly strong support as it was the lows of 2008 (during the financial crisis). It was tested twice and with it a ‘W’ pattern was formed and it rebounced off the levels.

So, what has changed since then?

1. RIMM is now lagging behind in the smartphone market; playing catchup to Apple’s iPhone (or iOS) and Google’s Android.

2. New competitors includes Nokia (with its partnership with MSFT) and HPQ with its webOS (formerly Palm).

3. Matured and slowing growth for its BlackBerry server.

I expect $35 to be supported first. Whether it will continue to hold will depend on its execution for its Playbook and other new smartphone devices based on the new platform (QNX).

Unfortunately, market demand is not with RIMM on the above. Apple’s iPhone commands a huge following, has a great established ‘App Store’ and the newly iCloud service will continue to lock in users and create demand from the younger generation as well (through music, videos and other digital consumption).


Netflix (NFLX) : Trade what you see.

Netflix is a good example that if I trade based on my beliefs, I will be losing quite a fair bit of money by now.

NFLX just announced that it has entered into an exclusive agreement with EPIX for their media library for distribution via the Internet. That itself is a good example of NFLX market leadership despite my view that it will face problems growing outside of US.

However, just because I have a bias doesn’t means the market will react according to my views.

And in fact, the saving grace for me is I stopped my short when NFLX rebounded off $95.

I tried to look for good short entry near the kumo resistance level on the daily chart but NFLX bullish move is extremely strong and bulldoze all the way up and just today alone, it was up more than 7% on the news.

The strong bullish momentum save the day (for myself). If the momentum has been weak and it has shown signs of slowing down or reversing when it hits the kumo resistance, this positive news will have a huge impact on my positions.

I consider this a blessing in disguise and a reminder to trade what you see. Sometimes, we hold on to our views for far too long without accepting that things have change. Imagine the damage done if I have continue to short NFLX at every resistance level!

Again a reminder: Wait for the setup. No SETUP, No TRADE!


Having said that, NFLX is back near its 52 week high. Watch the chart and act accordingly.


Cisco (CSCO) : Taking a bearish view

Generally, when I have a bullish Tenkan sen Kijun sen cross, I would have follow my chart and trade accordingly.

However, CSCO chart is showing 2 possible trends at the same time.