RIMM has been one of our prominent shorts for the past few weeks, and a position we finally closed early this week. The technical pattern in play was a classic head and shoulders pattern with a final target at $51 (note the dotted blue neckline on the chart). The stock seemed to have run out of downside momentum at the time, hence we closed it even though it had not yet reached the final final target at $51 yet.
Now a potential trade to the upside seems to be setting up. Note the stubborn support at $53 and the rally up to and above the 200 day moving average (red line). On a close above the 200 day we could envision that RIMM makes a run at filling the earnings gap (blue area) from March 24th. The trade works up to $62 for a final target and stops can be set as tightly as $55.50.
