A SLOW MARCH TOWARDS DOOM FOR RIMM
There are a million different ways to lose money in the financial markets. What catches most market participant's off-guard is the counter-intuitive nature of trading and investing. It's an issue that is best summed up by Jefferson Airplane in the song White Rabbit: When logic and proportion Have fallen sloppy dead And the White Knight is talking backwards And the Red Queen's "off with her head!" Remember what the dormouse said; "Keep YOUR HEAD" In order to "keep your head", you must realize when situations are obvious to a majority of market participants, it will slow down the pricing mechanism for whatever financial instrument is in question. The most recent case in point of this phenomenon comes in the form of RIMM. The maker of the popular, but increasingly outdated Blackberry line of cell phones is becoming painfully irrelevant, as the market for wireless devices is moving towards an application driven format. RIMM has been slow to react to the lightening pace with which the evolution of technology takes place. This has cost RIMM about $60 billion in market cap over the past two and a half years. More importantly, it may have cost them the opportunity of ever recovering the customers who have switched to either an Iphone or an Android device. The rule of today's technology marketplace simply states that once you are obsolete, you are obsolete. Unless you have the alien mind of Steve Jobs, you will be hard-pressed to find an avenue with which to recover. The best thing that RIMM has going for it is the fact that most everyone in the financial markets realizes that their back is pinned against the wall. A funny thing happens when a majority of investors begin seeing a situation as obvious. It creates a support dynamic for the stock price. It actually slows the descent of the stock price, as short-term money becomes involved and long-term interest in the stock slowly wanes. Below is a monthly chart of RIMM going back to 2007. You can clearly see that it has been the creation of an application driven model for wireless technology that has been the downfall of RIMM. Yes, the grand sell-off of 2008 played a part in the decline. However, the lack of recovery for the stock, while many similar names are making multi-year highs is very telling. (click on chart below to enlarge) It is most fortunate for RIMM that the markets thrive on punishing those who attempt to profit from obvious situations, regardless if their opinions ultimately end up being correct. It is this reason that will create a cushion of time that will...
TOP 3 MOST POPULAR POSTS FROM THIS PAST WEEK
1. 3 REASONS TO BE SHORT-TERM BULLISH 2. THE GUN: YOKU AND N ARE LOOKING RIPE FOR TOMORROW 3. PSTR: WHAT NEXT?
PSTR: WHAT NEXT?
The stock is up nearly 20% with more than 2 hours left until the close. I did mention two days ago that it looked ready for blastoff when it was holding near support, with volume increasing and the daily ranges narrowing. The chart below has further details: click on chart to...
3 REASONS TO BE SHORT-TERM BULLISH
An hour ago I posted the following tweet: 52 minutes ago: I smell short term upside in a market that's hangin out while oil rallies, new wars are fought and bearish commentary persists.st bullish $$ I wanted to amplify my reasoning a bit: - The market has been wonderfully persistent and steady in the face of some very serious headwinds and uncertainty coming in the form of oil moving towards levels that gave every excuse for the market to sell-off....but it hasn't. - There is also the issue of a new war being fought in the Middle East, which will act as a floor beneath oil prices for sometime to come. Not a reason for an imminent sell-off. However, if the bids below the market weren't substantial, the bears could have easily taken us lower given these events. - Then there is the issue of the persistent bearish commentary that I am seeing across multiple platforms. I am assuming that this bearish commentary is being followed by bearish action, such as lightening long positions or selling short into the market. The types of moves that Mr. Market loves to take advantage of so that it isn't made to look like a predictable two dollar whore. These facts leave me bullish over the next few days. Whatever chop we get should have an upward bias attached to...
PSTR: TECHNICAL UPDATE
A technical update on PSTR. If you aren't familiar, PSTR is a long-term investment position that was recently taken in the portfolios. The research report is available to all by clicking here. click on chart below to...
TRADE UPDATE
Have taken a medium sized trading position in N at 28.85 - 28.90. Details here.
WHAT MY MURDER OF A BIRD CAN TEACH YOU ABOUT TRADING
Most drivers will encounter birds throughout the day as they are driving. Birds have this uncanny ability of dodging traffic. They accelerate at the exact right time. They manage to stop in the exact correct places. Their decisions are crisp. They know the exact trajectory and speed with which to take off in order to avoid becoming a hood ornament. I'm driving down a city street in Los Angeles today. Not going extraordinarily fast. A little over the speed limit, perhaps. I spot a gentle, peaceful yellow bird hopping around the street. It seemed to be hurriedly attempting to nibble at what it considered to be lunch. The bird that I encountered today must have been new to the traffic scene. It suffered from a moment of indecisiveness. It was so clear to me as I was watching. I saw the bird become cognizant of the fact that I was coming at him at around 40 mph. At that moment, the risk of satisfying his hunger with whatever it was he was after in the street became too great. I was within maybe 20-25 feet of him at the time. He begins his attempt to dodge me by hopping to the left. I thought that it was a great move, as the left side of the road was clear and he could have just flown off back to his bird family, high atop a tree, in a better part of town. But then out of nowhere, he changes his mind completely and darts off to the right, about 3 or 4 feet off the ground. A small thud is heard as the bird gets polished by the right front end of my vehicle. I cringe and then become sad for some period of time. I immediately thought to myself, going right wouldn't have been a bad decision for the bird if he had committed to the decision from the beginning. It was going left for that split second that threw off his timing. Going left wasn't a bad decision either. It was clear of traffic. If he would have simply stuck to his decision to go left, his day may have turned out differently. My car didn't kill that bird, indecisiveness did. His bird brothers and sisters are dodging cars like mine all day. Their decisions are crisp and calculated. This bird, however, suffered from a split second of straddling the fence. It threw off his ability to time the escape correctly, costing him his life. Or her, it could have been a girl bird, I suppose. The point is that the whenever you enter a trade, you have...