As the manufacturer of the infamous “CrackBerry,” Research In Motion Limited (RIMM) once enjoyed near-total dominance over the smartphone market. That is, until Apple’s iPhone threatened to break RIMM’s hold on the sector. The BlackBerry is still arguably the top dog, but the sniper hits from Apple and the global economic recession have taken quite a toll on RIMM shares. In fact, RIMM plummeted more than 51% in 2008.
The security has made quite a comeback this year, soaring more than 81% so far in 2009. But RIMM is facing technical issues very similar to upstart smartphone maker AAPL. The stock was recently rejected by resistance at the 78 level, site of its post-plunge peak set on Sept. 26, 2008. Furthermore, the equity is staring up at potential round-number resistance at the 80 level, as well as its declining 50-week moving average. The combined weight of these technical hurdles has forced RIMM to retreat nearly 8% during the prior three trading sessions.
Meanwhile, sentiment is far from flattering for bullish investors. RIMM’s SOIR currently resides at an extremely complacent 0.84, in the 54th percentile of its annual range. Elsewhere, call buyers are swamping the ISE and the CBOE, as the duo’s 10-day call/put ratio of 1.78 reveals that nearly two calls have been bought to open for every put on these exchanges. This ratio also ranks above 73% of all those taken in the prior 52 weeks, underscoring rising bullish expectations despite weak short-term price action in RIMM shares.
There is also evidence that the stock’s recent spurt higher might have been related to short-covering activity. During the most recent reporting period, the number of RIMM shares sold short plunged by more than 19%. That said, there is very little fuel left in the tank, as less than 4% of RIMM’s float remains sold short. In fact, we could see these bearish investors return to the security, emboldened by the stock’s failure to overcome technical resistance.
Downgrades could also be a concern for the equity. RIMM has garnered 18 “strong buys” and six “buys,” versus 10 “holds” and just one “sell.” Any downgrades from this bullish bunch could send the security sharply lower.
