BlackBerry: A Quant Downgrade Falls on Weakening Charts
BlackBerry Ltd. (BBRY) was downgraded by TheStreet’s Quant Rating servicetoday so naturally we looked at the charts and indicators. BBRY made a big percentage rally in April and May but prices peaked in late May/early June and our indicators have turned lower.
It is interesting how two different schools of security analysis can point traders and investors in the same direction. Let’s check out the latest charts to see if BRRY is going to give back most of its spring advance.
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In this daily bar chart of BBRY, above, we can see a low volume sideways consolidation from late July 2016 through March of this year. Prices crossed above and below the 50-day and the 200-day moving averages. The daily On-Balance-Volume (OBV) line was neutral for this same time period and the Moving Average Convergence Divergence (MACD) oscillator spent much of its time below the zero line.
Things changed quickly in late March/early April with prices gaping to the upside on heavy volume. BBRY gaped a second time to the upside in April and a bullish golden cross can be seen in April as the 50-day moving average line crossed above the 200-day moving average line. The OBV line moved higher for two months but turned lower in late May as early buyers turned into sellers. The MACD gave a take profits sell in early June and an outright sell in late June.
In this weekly bar chart of BBRY, above, we can see that prices are above the rising 40-week moving average line. The weekly OBV line was strong and the MACD oscillator on this time frame has generated a sell signal.
In this Point and Figure chart of BBRY, above, we can see how prices rallied and have peaked. Weakness to $9.49 is likely to precipitate further declines.
Bottom line: A quantitative downgrade and weak charts tell me to avoid the long side as the April-May rally could be given back. BBRY could return to the top of the trading range around $8.00.
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(This article originally appeared at 12:39 ET on Real Money, our premium site for active traders. Click here to get great columns like this from Bruce Kamich, Jim Cramer and other writers even earlier in the trading day.)
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