On RIM's New High: A Technical View

Research In Motion (RIMM) shares traded to a new all-time high Monday on above average volume. Research in Motion's shares are among the first leading NASDAQ shares to reclaim new high ground after the first quarter's general market correction.

The company continues to report quarter after quarter spectacular EPS growth. Estimates for the coming two quarters are 118% and 78%. Sales are estimated to grow at 110% for the current quarter and 69% for the current year. EPS and sales estimates have been significantly increased over the past weeks. The company has almost no debt and a return on equity of 40.33%

RIMM's shares traded to new price highs on stronger than average volume on Monday. This action reveals RIMM shares completing a 6 month O'Neil Cup With Handle. The Cup With Handle was identified and coined by William J. O'Neil, founder and chairman of Investor's Business Daily, in his important investing book, "How to Make Money in Stocks."

click to enlarge

The current market environment is rewarding leading growth names. Other glamour names trading at new highs include Sohu.com (SOHU) and MasterCard (MA). RIMM shares are among the fundamentally strongest of all publicly traded shares. Shares of this strength trading at new price highs on strong volume have the potential to move much higher.

I have added RIMM to my Glam 5 Index and I may buy RIMM personally over the coming days. I will not buy the shares above $145. I will use stop losses in the 5-8% range to protect myself from downside risk. As I have written before, things can change quickly in the equity market, even for the very best companies, like RIMM.

Disclosure: I intend to buy RIMM in the near future.

Comments

[iphonecanada]

3 G iPhone coming to Canada could put some real pressure on RIM. Be careful.

[bill9300]

You seemed to have ignored the valuation of RIM, It is a company with $6bn in sales valued at $80bn, with a p/e over 60. Remember what Cramer advised in 2000?

In 2000 Cramer had this advice on how to make money in stocks- his advice ignored valuation and normal fundamental, Momo investing

See article, (all of his stocks crashed)

Cramer said-
"To answer that question, you have to throw out all of the matrices and formulas and texts that existed before the Web. You have to throw them away because they can't make money for you anymore, and that is all that matters. We don't use price-to-earnings multiples anymore at Cramer Berkowitz. If we talk about price-to-book, we have already gone astray. If we use any of what Graham and Dodd teach us, we wouldn't have a dime under management."

All of his picks back then crashed, even his 4 Horsemen of 2000.

article-

The Winners of the New World
By James J. Cramer

2/29/00 9:42 AM ET


You want winners? You want me to put my Cramer Berkowitz hedge fund hat on and just discuss
what my fund is buying today to try to make money tomorrow and the next day and the next? You want my top 10 stocks for who is going to make it in the New World? You know what? I am going to give them to you. Right here. Right now.
OK. Here goes. Write them down -- no handouts here!: 724 Solutions (SVNX:Nasdaq - news), Ariba (ARBA), Digital Island (ISLD), Exodus (EXDS), InfoSpace.com (INSP), Inktomi (INKT), Mercury Interactive (MERQ:), Sonera (SNRA), VeriSign (VRSN) and Veritas Software (VRTS).
We are buying some of every one of these this morning....



www.thestreet.com/fund...

[investorslive]

Its true the formula doesn't matter this is probably going to $200 based on what they have coming and if they can continue to meet these great demands

www.investorslive.com/.../

[SteveSinclair]

Stopped out of RIMM with ~6% loss.