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Wednesday, May 4, 2011
Technical Analysis - Research In Motion
While the chart does not indicate RIM is a good longer term investment, buying at a reversal near the bottom of the channel could result in a healthy shorter term profit. What does not appeal to me about this option is where the channel leads in relation to the blue line which appears close to the top of the channel. That line represents the 200-day moving average. It is the result of the average of the preceding 200 days, and the average of the preceding 200 days one day prior to that, and the average of the preceding 200 days one day prior to that, and so on. I always hesitate to own stocks which are trading below their 200-day moving average because they have a greater probability of downside surprises.