RIMM

I'm still blind in one eye, but I got an email about RIMM, so lets take a look.

 The first thing that stands out on this chart is RIMM's total lack of relative strength vs the market, it didn't rally at all with the market during the short squeeze. The white arrow is the signal candle, a close with a high lower then the signal candle's low will put this into a swing downtrend classification. All of the candles in the yellow box are noise, not one contributed to a higher high and not one had a high lower then the signal candle's low. Often these lateral formations are used for accumulation or distribution, as to which this one is, I need to see intraday charts and confirmation.

This is a 5 min chart and an opening like this is rarely good news. You can see support is being broken right now and it's triggered some stop-losses and probably some short sales as volume has increased. However, don't be surprised to see some gaming of the resistance level, even with the most bearish stock, Wall Street s still going to play the game and that has a lot to do with volume rebates so the more volume they can create, the more money they can make; it's just a fact that we see all too often.

Here's the daily 3C chart as of yesterday.

There's a very clear cycle with accumulation in July/Aug 2010 and distribution Jan-Feb 2011-a complete cycle from stage 1 accumulation, stage 2 mark up (which 3C confirms making higher highs with price), Stage 3 distribution at the red arrow and stage 4 decline. Right now on the daily there's a positive divergence, so until I can get eyes on the intraday charts for confirmation, I'd be a little careful. If that is real accumulation, then a break below support today would make sense.  The recent positive divergence isn't huge like the 2010 one so if it is confirmed, it would probably show a decent rally (if it is confirmed), but  don't think it will change the downtrend, it may technically speaking, but bigger picture, I'd view it as a bear market rally.

In any case, as soon as 3C is back up, I'll confirm whether or not that real accumulation.