Point Of Control
Though the following may appear technical, it is far from it. It is based on the market auction theory. The idea behind the market auction theory is that market participants are trying to find the fairest price where price equals value, which is known as the point of control. It is based on price, time, and volume. The idea is that the time that the stock spends at a certain price indicates the amount of volume at that price and fairness of the price. Over weeks, if the price of the stock remains at that level, you know that the chances of a violent movement is unlikely. A normal day resembles a normal distribution curve.
It is best to observe in real time how long BlackBerry price spends at each level and whether the price has a tendency to get back to the point of control the yellow bar. This is the price that most market participants accept. As you can see the points of control are close to the $7.50 strike. The market participants seem to be keeping it around that level.
(Source: ThinkorSwim)
Short Interest
Short interest is another aspect to pay attention to. 9.5% short interest is pretty high and suggests caution if you are thinking of shorting the stock. Short covering could occur, pushing the stock higher. The dollar amount of the move may be insignificant. For a 7 dollar stock, a move to 8 dollars is a 14.2% move. This is a large percentage move. Don’t expect the stock to have this kind of move in a few weeks. Many market participants look for a 10% move in the market per annum.
Also Read: BlackBerry Ltd (BBRY) Might Gain From The Tesla Motors Inc Hack
Conclusion
Long term is relative in the markets. You have to pay attention to what the other players are doing to survive. Fundamental analysis alone would falsely give you some mental serenity. However, understanding the behavior of the participants from different angles can give you an idea of what may or may not happen with Blackberry stock. It is best to wait until there is more clear and understandable participation in BlackBerry Ltd (NASDAQ:BBRY). You are better off putting your capital in a stock that is actually moving than ranging.
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The article BlackBerry Ltd (BBRY) Stock: Don’t Gamble, Look At The Data Points originally appeared on amigobulls.com. Watch our analysis video on BBRY
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Additional Links:
(1) https://www.amazon.com/Markets-Profile-Profiting-Auction-Process/dp/0470039094
(2) http://amigobulls.com/stocks-to-buy/top-tech-stocks/?ref=il&ref=im
