Serge Berger is the head trader and investment strategist for The Steady Trader. Sign up for his free weekly newsletter.
Research In Motion (NASDAQ:RIMM) — The famed maker of BlackBerry devices received a nice boost from the market gods on Monday, Aug. 15, rallying 10.4% for the day. The culprit? Google!
On that day, Google (NASDAQ:GOOG) announced its acquisition of Motorola Mobility (NYSE:MMI), which it paid a 63% premium for. Why? It’s all about the patents that Motorola has hoarded over the years. RIMM also has numerous patents, and the MMI acquisition has people speculating about a possible acquisition of RIMM. And, if not, at least the company has lots of juicy patents that are worth a lot.
I have touched on RIMM before, and the weekly chart’s hideousness speaks for itself.
The daily chart, however, is where things get more interesting. My buy target is on a daily close above $30. That’s where the down gap from June 17 comes into play. On that date, the stock opened about 20% lower on the back of the company’s earnings announcement.
The gray box indicates the gap area that, as gaps usually do, could get filled once the stock starts moving into that shaded area. The gap fills at around the $35 level, which would also be a final price target for this trade. Stops can be set near $28. More aggressive investors may want to enter this trade around $27.50 and have the bottom of the gap at $30 as their first price target.
- See Sam Collins’ Daily Market Outlook: How Deadly is the S&P’s Death Cross?
- See Serge Berger’s Daily Market Outlook: Why This Relief Rally Still Has Some Time Left
- See Sam Collins’ Trade of the Day: Get Out of General Dynamics While There’s Time
