BB Stock: A New Bull Market Is Born
On December 20, BlackBerry Ltd (NYSE:BB) reported earnings that beat on both the top and bottom lines. Investors were thrilled with this news and, in response, bid the share price of BB stock higher by 10.31%. This move toward higher Blackberry stock prices is very significant, and it suggests that a change in the tide has just taken place.
I have reason to believe that the price action following the earnings report has caused BB stock to cross a significant hurdle, indicating that a new bull market in Blackberry shares is now in development.
These beliefs are based on the information I was able to pull off the stock chart. For anyone who has not frequented my work, using a company’s stock chart in order to generate a view on it is a method of investment analysis called technical analysis. I have been using and applying this method for roughly two decades, so I feel I am well equipped to take on the task.
In my last report regarding this company, I stipulated that Blackberry shares needed to cross $11.80 in order to suggest that a new bull market was in development. BB stock is currently trading at $11.99, which means as long as the share price closes above $11.80, the implications suggested by this move are intact.
The following stock chart illustrates the significance of the $11.80 price point.
Chart courtesy of StockCharts.com
The $11.80 price point is where a significant level of price resistance resided. This level of resistance was responsible for creating the cup and handle pattern that is highlighted on the BB price chart.
A cup and handle price pattern is identified by its two distinct troughs, where the first is much larger than the second. These troughs are a result of the stock’s inability to break above a level of resistance.
This pattern is used to determine which direction the stock is heading in next. Breaking above resistance, which resides at $11.80, suggests that Blackberry stock is likely to appreciate.
This was not the first indication to suggest that bullish tailwinds were beginning to swirl around BB stock. In March 2016, Blackberry regained its footing above the 200-day moving average. The 200-day moving average is a metric that acts as a dividing line that separates bullish investments from bearish ones. When BB stock crossed above this average, it implied that things were beginning to turn.
The completed cup and handle pattern suggests that higher prices are on the horizon. The suggestion that a new bull market is in development was obtained using the following Blackberry stock chart.
Chart courtesy of StockCharts.com
This stock chart illustrates a trend consisting of lower lows and lower highs, which is the quintessential characteristic that describes a bearish trend. This bearish trend has been in development since Blackberry shares peaked at $148.13 in June 2008.
This bearish trend is best captured using a downtrend line by connecting the series of lower highs that characterized this bearish trend. The downtrend line highlighted on the stock chart represents a dynamic level of price resistance. In order to negate the bearish repercussions suggested by the bearish trend, the stock price needs to break above the downtrend line.
It just so happens that the downtrend line and the significant level of price resistance that defined the cup and handle pattern coincide at the same $11.80 price point. This is not a mere coincidence, and these coinciding levels add to the significance now that this level of resistance has been broken. It signifies that the decade-long bear market has finally concluded and that a new bull market toward higher BB stock prices is now in development.
The surge in price following Blackberry’s better-than-expected earnings report has caused a number of indications on the Blackberry stock chart to suggest that a new bull market is now in development and that, therefore, higher prices are on the horizon. Going forward, these developments bode very well for BB stock and are why Blackberry has made the list as a top pick for 2018.