We're seeing the exact same setup in another cellular phone stock:
(NOK - Get Report).
Like BBRY, Nokia spent much of 2012 crashing, only bouncing back in the last quarter after shares got too oversold. An identical pattern is in play in Nokia; the stock is a head and shoulders top, in this case with a neckline at $3.80. A breakdown below that price level is the sell (or short) signal for this phone maker. Here again, a breakdown in momentum adds some extra confirmation to a short-side setup in this stock.
>>3 Tech Stocks Surging on Big Volume
Even though the right shoulder hasn't formed in either of these two names, the trading implications remain the same. If $3.80 gets broken here before a right shoulder has a chance to form, I'd still be a seller.
Lest you think that the head and shoulders is too well known to be worth trading, the research suggests otherwise: a recent academic study conducted by the
Federal Reserve Board of New York
found that the results of 10,000 computer-simulated head-and-shoulders trades resulted in "profits
would have been both statistically and economically significant."