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

NEW YORK (TheStreet) - When we profiled BlackBerry (BBRY) 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.

This morning, the stock traded as high as $9.52, then settled to $9.27 as of noon.

Courtesy of MetaStock Xenith

The weekly chart for BlackBerry is positive, with its five-week modified moving average at $8.03 and its 200-week simple moving average at $21.65. The stock has been below its 200-week SMA since April 2010.

Note that the BlackBerry bubble popped after an all-time intraday high at $148.13 was set in June 2008.

Investors looking to buy BlackBerry shares should consider using a good 'til cancelled limit order to buy weakness to a monthly pivot at $8.13.

Investors looking to sell BlackBerry shares should consider using a good 'til cancelled limit order to sell strength to a quarterly risky level at $11.16.

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At the time of publication the author held no positions in any of the stocks mentioned.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff

Richard Suttmeier is the chief market strategist at ValuEngine.com. He has been a professional in the U.S. Capital Markets since 1972, transferring his engineering skills to the trading and investment world.

Suttmeier has an engineering degree from Georgia Tech and a Master of Science degree from Brooklyn Poly. He began his career in the financial services industry in 1972 trading U.S. Treasury securities in the primary dealer community. He became the first long bond trader for Bache in 1978, and formed the Government Bond Department at LF Rothschild in 1981, helping establish that firm as a primary dealer in 1986. This experience gives him the insights to be an expert on monetary policy, which he features in his newsletters, and market commentary.

Suttmeier's industry licenses include, Series 7 and Registered Principal (Series 24). He has been the Chief Market Strategist for ValuEngine.com since 2008 and often appears on financial TV.

Click here for details on Suttmeier's "Buy and Trade" investment strategy.

Richard Suttmeier can be reached at RSuttmeier@Gmail.com

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