Shares of handheld device maker Research In Motion (NASDAQ: RIMM) have taken a hard stumble since its most recent high back in February.  The stock fell from $70.54 all the way down to a $28.82 in mid June and as such is currently back at levels last seen in 2006.  Of course some of the headwinds the company is facing are obvious; tough global competition in this currently quite possibly most competitive smart phone market from Apple to Samsung and many more are not making it easy.  The race for a ‘better’ tablet pc is also one which Research In Motion (NASDAQ: RIMM) seems to want to take part in but its tablet pc just hasn’t won over many users quite yet.  And then there was the profit warning which the company issued in late April where it took second quarter estimates down about 12%. 

After such a massive and steady move lower I wanted to look at this stock from the long side again as one important aspect to Research In Motion (NASDAQ: RIMM) is not to be underestimated; its large and loyal corporate customer base which has been using the Blackberry product for many years.

The late April profit warning led the stock price to drop below an uptrend line that has been in place since 2003, and from there the stock accelerated to the downside.

 

If we look at this in a slightly different way we see that the stock dropped out of a long-term downward sloping channel, showing the magnitude of distribution by institutional investors at the time. 

 

The stock then gapped lower again on June 17th but managed to stabilize over the next two days.  In the second half of June Research In Motion (NASDAQ: RIMM) continued the price stabilization process and continually found resistance at the $30 mark, which is the lower end of the gap down from June 17th.

I see a trade to the long side setting up on a daily close above $30.  At that point the stop-loss would be placed at $28 and the profit target would be at the fill of the gap (gray box) at $34.60

 

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