zak mir’s weekend missive – All things stateside

2 mins. to read

I have to confess as far as Groupon (GRPN) is concerned, I’m an old fuddy-duddy. It would appear that the group is engaged in something I really don’t understand. Something to do with offering discounts which are offered on the Internet..? This may be great for some, but frankly I don’t want this company’s discounts, even if it would save me money . In fact, I regard the whole exercise as an attempt to take advantage of the financial crisis by dangling “cheap” offers in front of people who probably should not be buying the items involved at any price. If I have got the concept wrong, I do apologise.

In any event, the reason for the inclusion of the stock today is actually on the basis that we appear to be looking at a mega (I don’t  say this often) buy signal. Apparently the fundamentals are backed by hedge fund stake-building. But if you had followed Odey Asset Management into Man Group (EMG) lately, so far it would have been a painful experience. No, this is a pure technical play on Groupon, with a double charting signal. The first is an island bottom reversal after a massive November gap to the downside, and the second is the end of day close on Wednesday to fill the gap at $3.77. The likelihood now is that while there is no end of day close back below the right side of the island bottom at $3.19, the upside here should be a return to the September / October resistance zone of $5.50.

It would appear that until very recently shareholders of Research In Motion (RIMM) were having to adopt a similar type of brace -brace position to that of our friends at Groupon! However, the clue to the recovery here was the late September bear trap rebound. This event is important as it suggests to me that rather than the shares being a sell at the 200 day moving average as you would normally expect in a severe downtrend, the Blackberry group may actually keep on recovering. Exactly where the upper parallel of the post June price channel is on the daily chart remains something of mystery, but the best guess at this point is that it is heading for $13.50, and that the target could be hit within 4-6 weeks. Of course, risk management is important here and there would not appear to be any point being exposed lower than the initial November $9.17 peak. Indeed, I would start to ask some serious questions regarding the long argument on any sustained price action below $9.50.

Finally, as we are over in the United States with this blog, it was difficult to resist looking at Apple (AAPL). What we have here is theoretically an island bottom on account of the November gap to the downside and then the gap up. However, there has already been an initial failure to close the gap down, something which hints that even if Apple has put in a lasting floor there may be an opportunity to buy the stock at or near the floor of the gap higher this month at $530.

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