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Update on Research In Motion (RIMM)

|Includes: BlackBerry Ltd. (BB)

 Yesterday we started analyzing a potential trade in RIMM to the long side, see the blog entry here:

After hours yesterday RIMM came out with a fairly smelly profit warning for the current quarter, bringing the per share profit estimates down to between 1.30 - 1.37 from the previous estimates of 1.47-1.55.  That's about a 12% drop in estimates.

Several things:

First, as discussed with subscribers and noted in the blog entry, we would have entered this trade to the long side had RIMM closed clearly above the 200 day moving average yesterday, which it did not and hence we did not enter the trade.  That's nice because in after-hours trading last night the stock traded as low as $50.  

Now, here's the thing though.  Let's for a moment imagine a scenario where we would have gone long RIMM yesterday around it's closing price (right at but not clearly above the 200 dma) of $56.60.  If you were quick enough and had set an alert when the price of RIMM falls below $55.50 (the stop-loss price we discussed yesterday), you may have had a chance to get out near that price level.  Even if you did not however and are now stuck having to close the position around $50 you should find comfort in the fact that you had a clear plan in place for this trade.  It's never fun getting stopped-out of a trade or worse like in this case, where the stock is likely to gap down below the stop level.  However, such is trading; in order to win you have to lose a few.  So just remember that this is a probability 'game.'  If you have a 'system' that works over time you should not be afraid to take the next trade that your system flashes, or else your P&L will  have more L and worse yet, you will mes with your phsyche.