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Research In Motion a Study In Movement Upward? 
Thursday, August 21, 2008
By Jeffrey Garceau
Research In Motion Ltd. (RIMM) gained $4.33 or 3.4% to experience a 'big' gain Wednesday on a 'trend day' up pattern, opening in the lower 20% of the day's range while closing in the upper 20%, and gaining more than a standard deviation above the average one-day percent move over the last 30-days, to close at $130.28. The stock also crossed above the 100-day moving average.
RIMM has been on an upward trend since mid-July, although recently it has been taking on a pattern that could be a bullish continuation wedge, and this may indicate a continuation of the upward pattern. According to our EventEdge analysis tool, what has happened in the past when, in the month of August, RIMM experiences a trend day up while trading above the 100-day moving average?
Q: What has happened in the past when, in the month of August, RIMM experiences a trend day up while trading above the 100-day moving average, omitting any repeat occurrences within 10 trading days?
A: According to the 9 previous occurrences of this event, EventEdge indicates that RIMM has shown a very strong bullish edge that peaks 49 trading days after the event. Thus, the projected date for the peak of the bullish edge relative to the current event date (Wednesday, 20 August 2008) is Wednesday, 29 October 2008.
RIMM rallies in 89% of the cases (8 of 9) by an average of 49.7% relative to the close on the event date. The average of the 1 decline is -14.8%. The overall return of the 9 cases is 42.5%, which, based on the close of RIMM on the event date ($130.28), provides a target price of $185.65.
The data from 8.6.2008 is incomplete because not enough time has passed to reach the peak edge. After 10 trading days since that occurrence of this event RIMM has returned 2.3%, which is significantly less than the average return after 10 days (8.5%).
Note: the double digit returns of the first couple of events are not likely to repeat, occurring as they did during the heady dot-com bubble days of explosive growth for RIMM, so the average is likely to be optimistic.
To view this idea in EventEdge® click here3
Jeffrey Garceau 4is an analyst with MarketHistory.com.
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Let variable values:
@ = GII.RIMM.NASDAQ
theEvent = IF
Date is August
AND {
(High of @ - @) is less than (0.2 * (High of @ - Low of @))
AND
(Open of @ - Low of @) is less than (0.2 * (High of @ - Low of @)) }
AND
@ is more than 100 value average of @
THEN 1
ENDIF
Date Day t t+10 t+20 t+30 t+40 t+49
08/11/1999 Wed 6.3 52.8 94.1 50.8 56.1 61.3
08/22/2000 Tue 5.0 28.0 25.4 68.9 86.4 59.4
08/21/2003 Thu 6.8 -5.7 14.2 41.4 43.8 49.2
08/02/2004 Mon -0.5 -8.3 0.5 11.8 25.4 24.0
08/18/2004 Wed 3.9 1.9 22.8 28.2 34.0 50.6
08/19/2005 Fri 4.6 8.8 6.0 -7.1 -11.3 -14.8
08/10/2006 Thu 8.1 8.2 7.9 17.2 46.8 48.9
08/02/2007 Thu 4.0 -11.6 11.0 16.8 31.9 48.6
08/20/2007 Mon 7.0 8.5 14.9 22.4 40.0 55.2
08/06/2008 Wed 4.4 2.3 NaN NaN NaN NaN
08/20/2008 Wed 3.4 NaN NaN NaN NaN NaN
Avg 4.8 8.5 21.8 27.8 39.2 42.5
AvgPos 5.4 15.8 21.8 32.2 45.5 49.7
AvgNeg -0.5 -8.5 NaN -7.1 -11.3 -14.8
PctPos 90.9 70.0 100.0 88.9 88.9 88.9
PctNeg 9.1 30.0 0.0 11.1 11.1 11.1
Maximum 8.1 52.8 94.1 68.9 86.4 61.3
Minimum -0.5 -11.6 0.5 -7.1 -11.3 -14.8
StdDev 2.3 19.2 28.2 22.7 26.0 24.0
ZStat 2.1 0.4 0.8 1.2 1.5 1.8
Variance 5.3 368.0 795.3 517.4 676.3 576.9
11 Occurrences |
Comments:
Web Address of this trading idea:
Links:
2 http://www.markethistory.com/content/analog/analog.html?ticker=RIMM
3 http://www.markethistory.com/content/events/stocks/chart.html?ticker=RIMM&events=month,TrendDayUp0,AboveSMA1000
4 http://www.markethistory.com/staff/detail.html?s=garceau