BBRY: BlackBerry Stock Is Hot to the Touch

Advertisement

Shares of wireless solutions provider BlackBerry Ltd (NASDAQ:BBRY) have largely frustrated traders and active investors over the last six months or so as they continue to chop back and forth, waiting for a news catalyst to power the stock higher. However, patience ultimately should pay off as investor confidence trickles back into BlackBerry stock and pushes BBRY higher and out of its defined trading range.

https://investorplace.com/hot-topics/beat-the-bellIn many ways, Blackberry’s stock price is a good case study of what happens to a fallen star company (i.e., one that once led its industry but ultimately fell badly behind its fierce competitors). The issues with Blackberry are structural and thus take time, which is why for BBRY, it is crucial that traders and investors alike keep the bigger picture in mind and focus on the company’s ‘restructuring’ plan.

Blackberry CEO John Chen has done a great deal of work since assuming the position in November 2013, including rounds of cost cutting, a focus on outsourcing and finally concentrating on the company’s core strength and value, which are the security focus of its mobile software platform and messaging system.

The recent announcements by Blackberry that it will be working with both Google Inc (NASDAQ:GOOG, NASDAQ:GOOGL) and Samsung Electronics Co Ltd (OTCMKTS:SSNLF) helped gain back some investor trust, although the stock remains trading in a choppy fashion.

BlackBerry Stock Charts

Looking at BBRY from a multiyear weekly perspective, we see that the bleeding stopped after a multiyear slide, and BlackBerry stock began to bounce in the fourth quarter of 2012, only to fall again and marginally undercut the September 2012 lows in December 2013.

From a price action perspective, however, that looked to have been an important inflection point for BBRY as it then began to rise again, but in a more systematic and likely sustainable manner.

In essence, the price action since early 2013 has now taken the shape of a well-defined wedge that, if and when broken to the upside on a weekly basis, should be a telling sign for investors in BlackBerry shares.

bbry stock charts weekly blackberry ltd
Click to Enlarge

On the daily chart, we see that while BBRY stock has been stuck in a defined pattern since last August — and as a result, its medium-term moving averages (50-, 100- and 200-day) currently are huddled close together — there were two breakout-fakeout moves (November 2014 and January of this year) that shook traders out of some money.

And this brings me to an important lesson: Because of Blackberry’s structural issues, the stock has an above-average amount of headline risk. So when BBRY announces major new partnerships or rumors of a sale fly, BlackBerry stock can rally in a major way only to give those gains back by day’s end if the rumor ends up being proven wrong.

Looking at those two breakout-fakeout moves on the daily chart, we can label them noise and find that the diagonal resistance line (black) from last July remains the line in the sand that the stock must overcome on a weekly basis before a better and more sustainable move higher will stick the landing.

blackberry stock charts daily bbry
Click to Enlarge

For active investors, it’s important that BlackBerry stock at the very least pushes to a weekly close above the $11-$11.20 area; then, it will stand a much better chance of releasing higher toward the $12.50-$13 area.

Also note that BBRY is scheduled to release its next batch of earnings on March 26, which may just be the best date when BlackBerry stock stands a better chance of climbing past the aforementioned technical resistance line.

Like what you see? Sign up for our daily Beat the Bell e-letter and get investment advice delivered to your inbox every morning!

Download Serge’s trading plan in the Essence of Swing Trading e-book here. As of this writing, he did not hold a position in any of the aforementioned securities.

More From InvestorPlace


Article printed from InvestorPlace Media, https://investorplace.com/2015/03/bbry-blackberry-stock-hot-to-touch/.

©2024 InvestorPlace Media, LLC