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BlackBerry Shares Break Out: Must-See Technical Charts on Earnings

NEW YORK (TheStreet) - When we profiled BlackBerry (BBRY - Get Report) Wednesday in "BlackBerry, Pier 1, Rite Aid, Darden: How to Trade Before Earnings," we mentioned that that a positive reaction to earnings would begin an uptrend for the stock above its 200-day simple moving average at $8.20.

When discussing the weekly chart we indicated that a close this week above its five-week modified moving average at $7.78 would shift the weekly chart to positive.

Well, that's happening. BlackBerry reported an earnings per share loss of 11 cents before the opening bell on Thursday, beating analysts estimates by 17 cents.

Let's look at the daily and weekly charts to judge how far the stock can climb and what the risk is if the stock falters -- as it has so many times in recent years.

More on BlackBerry: BlackBerry Financials Continue to Improve; Shorts Run for Cover

The daily chart shows that BlackBerry broke out above its 200-day simple moving average now at $8.18 on Wednesday, which was a sign that a positive reaction to earnings had a high probability.

Courtesy of MetaStock Xenith

Over the past two years, the stock traded as high as $18.32 back on Jan. 24, 2013, then gapped below its 200-day SMA on June 28, 2013. The stock traded as low as $5.44 on Dec. 10, 2013.

It was extremely important that BlackBerry stayed above $5 a share. Why? Many broker-dealers will not let investors own a stock below $5 on margin. A break below $5 would have triggered margin calls.

In 2014, BlackBerry traded as high as $10.90 on Feb. 25, and at that time was above its 200-day SMA. Many equity money managers cannot own a stock trading below $10, which was a warning when that level did not hold.

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