"Research In Motion Ltd. (RIMM) will spend up to $1.2 billion to buy back about 21 million of its shares, or 3.6% of its total shares outstanding. The buyback will start Nov. 9 and last for up to one year."
That was the headline news today on Research in Motion symbol RIMM so I decided to look at the chart to see what was going on in the "real world". When I got to the chart, one thing immediately jumped out at me and that was the negative action that this market has shown in the past several weeks. Looking at this market a little closer I was able to see that our "Trade Triangle" technology was 100% negative and that our monthly "Trade Triangle" indicator had turned negative on October 28th at $63.38. This is a major negative in my mind for this market.
A little over six weeks ago I produced a video on the relationship between Apple and RIMM.
I called it the "Battle Of The Tech Titans," and in this short video I explained that we felt the relationship was changing between Apple, Inc. (NASDAQ_AAPL) and Research In Motion, Ldt (NASDAQ_RIMM). I detailed a strategy of approaching this market using a trading strategy that I call "pair trading" or "trading pairs."
What trading pairs means is that you buy one market while going short the other market in the same sector. Now Apple and RIMM are battling it out right now in the smart phone sector. It remains to be seen who is going to be triumphant in this battle but it would appear as though Apple may have the upper hand based on its very successful "APP" store.
Trading pairs is what many professionals do when they are unsure as to the direction of the general market but feel pretty comfortable in their analysis of the relationship between two stocks. I hope you find the video both informative and educational.
The video is free to watch and there is no need to register. I would love to get your feedback about this video on our blog.
It is the battle of the tech titans as both RIMM and AAPL battle for the smartphone market share. Although Research In Motion is a well established tech giant as the creator of the BlackBerry, they may have hit a wall with Apple, Inc.'s launch of the phenomenally popular iPhone.
This tech battle may create a way to trade these markets with a lower risk. During this latest rally, RIMM did not perform well, nor were the changes in price as exuberant as the shares for AAPL.