I don’t believe in Palm reading. But here’s what I came up looking up PALM ahead of their earnings…
So what do we got?
- A stock hated by everyone. No one is really interested in this stock. On balance volume is crashing, and MACD is stuck at 0. We could be in for a influx of buyers. I would like to see RSI at a lower extreme.
- I marked some pivot points on the right side of the chart. They are pretty wide: $16.00, $19, and $23.
- An observation that amazes me is how boring PALM has been in the midst of this tech rally. The Nasdaq has brought up many semiconductor, software, and tech hardware stocks up to at least something close to their May highs. Except PALM! If Palm were to follow the script, it should be trading closer to $20 by now, perhaps above it.
- … meanwhile, Palm’s competitor, Research in Motion (RIMM) has followed the script quite well. RIMM is rallying a cool $20 since August lows of $65 up to $85!
- Stock is heavily shorted, with something near 16% of float.
A second chance? Maybe. I’m not sure. The stock is already down from a earnings warning issued on September 6. I hate it when they do that- it messes up the conference call volatility. That single action could completely nullify this trade, so don’t ignore it.
The Trade: I see a good opportunity to play a stranggle. The October 17.50 call, and the 12.50 put looks most likely to double, or even triple. A more conservative approach would be the January 08 @ 20. That seems like an easy double w/n a year.