BlackBerry Limited (BB) stock got crushed in 2011 and 2012, losing market share to Apple Inc.'s (AAPL) iPhone and Alphabet Inc.'s (GOOGL) Android operating system. BlackBerry stock has been scraping along deep lows in the single digits for more than six years, looking for revenue sources that will support a return to the glory days. While software licensing and expense cuts have restored profitability, they have added remarkably little capital to the company's bottom line.
Analysts expect BlackBerry to report earnings per share (EPS) of just $0.06 on $242 million in revenues in Friday's fourth quarter confessional. The stock fell to a 30-month low after December's third quarter release and reversed in an oversold bounce that recently failed at 200-day exponential moving average (EMA) resistance above $9.00. The reversal and short-term overbought technicals predict that sellers will prevail after the pre-market release.
BB Long-Term Chart (1999 – 2019)
The stock came public on U.S. markets at $1.85 in February 1999 and bottomed out at $1.27 a month later, ahead of an uptrend that escalated into the new millennium. It topped out at $29.29 in February 2000 and turned sharply lower when the internet bubble burst, descending to a 52-week low at $4.10. A bounce into 2001 failed at the .618 Fibonacci sell-off retracement level, marking the first in a series of lower highs into the first quarter of 2003.
A mid-decade uptrend reached the prior high in 2004, generating a two-year consolidation pattern, followed by a trend advance that posted an all-time high at $148.13 in June 2008. Aggressive sellers took control during the economic collapse, dropping the stock more than 75% into the mid-$30s in December. A bounce into the new decade stalled in the $80s, carving a lower high into a 2011 breakdown that generated intense downside into the 2012 low at $6.22.
The stock undercut that support level in 2013 and turned higher, building a trading floor that's still intact more than five years later. Four tests at this level into 2018 found willing buyers, while the decline in December reversed just 35 cents above the 2012 low. It bounced nearly 50% into March 2019 and reversed near a descending lows trendline in place for the past 14 months. That barrier also marks 50-week EMA resistance, suggesting that the recovery wave has come to an end.
The monthly stochastics oscillator carved a double bottom in 2018 and crossed into a buy cycle in January, predicting at least six to nine months of relative strength. This tailwind should limit the downside in the coming months but isn't a good reason to buy the stock, given multiple layers of overhead supply. The 50-month EMA at $11 now marks the dividing line between bulls and bears, with a rally above that level establishing the first major buy signal since January 2018.
BB Short-Term Chart (2016 – 2019)
The on-balance volume (OBV) accumulation-distribution indicator has traded within a relatively narrow band since 2014 (red line), marking a endless standoff between bulls and bears. It barely budged during the high-percentage rally into March, signaling a bearish divergence due to the weak buying power. This adds importance to the recent breakdown through the 200-day EMA, predicting that aggressive bears will now reload short positions.
Watch price action around the 50-day EMA if Friday earnings trigger a sell-the-news reaction. The stock broke out above that level in January and has held new support for about two months. As a result, a breakdown may be significant, exposing the downside to another test at the six-year trading floor. Conversely, a rally that holds the double digits would mark the first sign of better times to come, while continued upside through $11.50 should put professional sellers on the defensive.
The Bottom Line
BlackBerry shares could sell off after Friday earnings, but the multi-year trading range is likely to remain intact into the foreseeable future.
Disclosure: The author held no positions in the aforementioned securities at the time of publication.