Tag Archives: markets

BlackBerry($BBRY) Z10 UK Performance

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BBRY is having another good day today, a high of $16.89, but has now pulled back to $16.24. That being said, I would like to talk about some new data that came out.

Deutsche Bank conducted a survey in the UK to try and get an idea of how the new BlackBerry Z10 is performing. Analysts called 30 cell phone carriers in the UK and asked the same questions a new user who is in the market for a smartphone would ask. The negative that came out of the survey is that the BlackBerry Z10 isn’t being promoted much by carriers. The survey also found that sales representatives weren’t educated in using the new phone so they are hesitant in promoting something they aren’t sure how to use. This is not a good sign for BlackBerry. Below are some notes from the survey:

Results:

  • The iPhone 5 and Samsung Galaxy III are still the most recommended smartphones.
  • Out of the 30 phone carriers surveyed, only 2 recommended the BlackBerry as a smartphone.
  • A few sales representatives said they weren’t trained on the new BB10 operating software.
  • One sold have sold out of the Z10; some have sold many; and others have sold a few.
  • Reviews where mixed when they were asked to do a comparison between the iPhone 5, Samsung Galaxy III and the BlackBerry Z10.

After looking at these results, I’m more skeptical about the success of BBRY. The new phones are not released in the the US yet, so BlackBerry can still fix these issues that they’re facing abroad and not make the same mistakes when it gets to the US. I think the main reason carriers aren’t promoting the new BlackBerry Z10 is because they are not educated on all the new features of the phone. In my opinion, this is a mistake on BlackBerry’s part. Having unveiled this new phone so late in the game, BlackBerry should’ve held training sessions for sales reps. This way, sales reps would be familiar with the phone and would truly know why this phone might be better than any other smartphone currently on the market. Being familiar with the phone, they will be more likely to recommend the phone to users because they are able to explain all of the positives. Users with be more likely to sign a two year contract if they receive good reviews from the sales reps than if they don’t. Based on the survey, sales reps are currently recommending the iPhone 5 and the Samsung Galaxy III more often than the Z10.

That being said, I would look to take advantage of the volatility in the stock by using options to profit. However, I still am not 100% convinced that BlackBerry will be successful. I will still continue to see how BlackBerry deals with these problems and keep you updated on any new developments.

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Is Blackberry($BBRY) back?

Today, the company formerly known as Research in Motion (RIMM) became BlackBerry (BBRY). On Friday, RIMM had closed at $13.03. Today, BBRY opened at $13.71, up 5.22%. Throughout the day, BBRY continued to perform extremely well despite a declining market. At the end of the day BlackBerry closed at $14.98, up 15.02% for the day. In after hours trading BlackBerry is trading up $0.15 or 1%. Overall, BBRY had a great day while the market heads lower— Dow down 0.93%, S&P 500 down -1.15% and the Nasdaq 1.51% lower.  So why did BlackBerry end up 15% higher today? Was the Super Bowl commercial that good, or does this company really have value? Let me lay out what I think every investor should know about BlackBerry before they take out their checkbooks and invest in this stock.

After numerous delays and development issues, BlackBerry finally unveiled their new phones on January 30th, 2013. On that same day, they also decided to drop the Research in Motion name and just simply be BlackBerry. The two phones are the BlackBerry Z10 and the BlackBerry Q10. The Z10 is 4.2 inch touchscreen smartphone, similar to the popular smartphones currently in the market, such as the iPhone. The Q10 however  still contains the iconic physical BlackBerry keyboard. Both will run the company’s new operating system, BlackBerry 10. Looking at the graph below, you can see that on the day of the announcement BlackBerry actually decreased. The reason, I think, is that investors have been waiting for BlackBerry to come out with a new phone for almost 18 months now, and this just wasn’t big enough to restore faith in BlackBerry. In addition, the fact that the phones wouldn’t be available in the US until March might have discouraged investors as well. This sent BlackBerry stock back into the $13 range, which is great entry point for the stock based on a Discounted Cash Flow (DCF) valuation (valuing the stock at $20) and relative valuation. However, I am a little skeptical to whether or not BlackBerry will be successful in the future.

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Today, when BlackBerry started trading under the new name and ticker, BBRY, we saw it end the day up 15%. When i was trading BBRY today, it seemed as if I was trading an IPO. BlackBerry had been on a downtrend ever since the unveiling of the two news phones, and today, as soon as it started trading under the new ticker we see it do extremely well. I read an article today that said that sales in the UK seem to be strong. Some places where running out of the phone, and most where seeing strong demand. According to a note obtained by Forbes, an analyst at Jefferies stated that “We estimate sell-in to be at least several hundred thousand units. To put that in perspective, the iPhone had first weekend sales of 5 million+ in the U.S. The U.S. is five times larger so continued strong sales could bode very well for Blackberry.” If this holds true, BlackBerry will see their stock jump higher than the 15% we saw today.

I would be very skeptical when trying to trade BlackBerry. Early indicators such as UK sales, tell us that they might have a good product and people might like it. However, we have to keep in mind that it might be a little too late for them. People have already fallen in love with the iPhone and the Galaxy, so it might be tough trying to win these users over. Also, the US will be the biggest test to see if BlackBerry will comeback and be successful. Since the new phones will not be available in the US until end of March/early April, it will be tough to see if they can regain some market share. I will continue following BlackBerry and see how the new phones perform in the UK and Canada. This will give me and idea of how the phones might perform in the US once they are released here.  That being said, I think that BBRY does have potential but I’m not 100% convinced yet. I would continue trading this stock at small blocks or even options. This way, you will not be risking much and at the same time you will not miss any big moves, like the one today. I will keep you guys updated as more data comes out.

 

 

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My Favorite Exit & Entry Technical Indicators

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Relative Strength Index

Definition

The relative strength index is a technical indicator that looks at the speed and significance of historical price movements of a market or stock over a defined time frame. In it’s simplest definition, the relative strength compares the number of higher closes to the number of lower closes. A stock or market with more or stronger higher closes will demonstrate a higher relative strength index. On the contrary, a stock or market with fewer or weaker higher closes will demonstrate a lower relative strength index. The relative strength index is displayed as a ratio from 0 to 100.

Interpretation

The relative strength index can be used as an overbought/oversold measure. As I mentioned before, we know that if a stock has a higher relative strength index it will have more or stronger higher closes. In other words, a market or stock with a high relative strength index will exhibit rapid upward price movement.  Typically, stocks that are bought rapidly will become overbought. Overbought stocks or markets can be identified as ones which have a relative strength index of 80 or above. Wilder, who is the creator of the relative strength index, said that if a stock or market is oversold, it is bound to reverse at some point. Similarly, we know that if a stock has a lower relative strength index it will have fewer or weaker higher closes which will exhibit rapid downward price movement. Stocks or markets that are sold rapidly will become oversold. Oversold stocks or markets can be identified as ones which have a relative strength index of  20 or lower.Again, stocks or markets that become oversold will have to reverse at some point.

The Fast Stochastic

Definition

The stochastic oscillator is a technical indicator that uses key support and resistance levels to examine the momentum of a stock or market. The stochastic oscillator compares a stocks or markets current price to its price range over a period of time. When a stock or market’s current price moves towards the price ranges upper boundary, the stochastic oscillator will be higher. When a stock or market’s current price moves towards the price ranges lower boundary, the stochastic oscillator will be lower. The stochastic oscillator is displayed as a ratio between zero and one-hundred.

Interpretation

Similar to the relative strength index, the fast stochastic can be used as an oversold/overbought indicator. It is not unreasonable to see a stock or market trade within a certain range over a defined period of time. If a stock or market is trading with within a certain range, you can assume that as the price reaches the upper boundary, the stock or market becomes overbought putting downward pressure on the price. On the other hand,  as the price moves towards the lower boundary, the stock or market becomes oversold which puts upward pressure on the price of the stock. Generally, a stock or market is considered overbought if the fast stochastic is above 80 and oversold if they fast stochastic is below 20.

Using These Indicators

After conducting other supporting types of analysis, I use these indicators to determine an entry or exit point with regard to a particular stock or market. Generally, I look for both of these indicators to unanimously point to oversold or overbought. In my experience I find that if these indicators both point to overbought or oversold they are extremely accurate and can indicate the start of a upward or downward trend. These indicators, when used together, can prevent you from entering a stock in a downtrend or exit a stock in the middle of an uptrend. Even though they are both accurate on their own, they are much strong when combined.

Don’t Believe Me?

The SPY one year daily chart highlights this entry/exit technique in greater detail. The blue arrows all point to areas in which the relative strength index and fast stochastic are below twenty, or oversold. Using what I described above, we would expect that touching these levels would be followed by a moderate to significant upward price movement. As the chart illustrates, this held true.

You will also notice that if the indicators do not agree, they are not as powerful and often have price movements inconsistent with what I described above.

SPY

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