Research in Motion (RIMM Quote - Cramer on RIMM - Stock Picks) is in major trouble after last week's poorly received earnings report. The stock rallied to a 137 high in November and spent the next six months pulling back and consolidating its strong gains. It finally broke out a week before earnings, hit 148, and pulled back a few points just ahead of the news.
The release triggered an 18-point gap on twice the average daily volume. Continued selling pressure into week's end dropped the stock to 116, which erased almost half the gains posted between February and June. While this issue should bounce soon, it's nowhere near a recovery phase because higher prices will be sold aggressively.
The violent downturn triggered a weekly "2B" sell signal, which denotes a reliable short-sale setup after a failed breakout. Shareholders trapped at higher prices should keep pressure on this former leader for weeks or months, raising the odds this decline will accelerate and drop price into the March gap near 105.
First Solar (FSLR Quote - Cramer on FSLR - Stock Picks) rallied to a 283 high in late December and pulled back with the broad market. It bottomed out 140 points lower in January and began a steady recovery. The stock returned to the high in April and dropped into a sideways pattern that tested round-number resistance at 300 for over six weeks.
The stocks tagged a new high at 317 on May 14, but the upside never gathered steam, inviting short-sellers to reestablish positions. The next downswing carried over 80 points before giving way to a fresh bounce about three weeks ago. Sadly, this uptick is also running out of gas at the seemingly impenetrable barrier near 300.
The stock has performed well considering the broad market decline, but it really has no place to go right now, except down. The rest of the solar sector is dragging in the mud, buffeted around by stalled legislation in the United States and Europe. I believe it will take higher equity prices across the world to finally lift this stock to new highs.
Alan Farley
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