Canada's BlackBerry Limited (BB) is trading flat in Wednesday's pre-market session after beating first quarter earnings per share (EPS) estimates by a penny. Revenues rose 23% year over year, meeting expectations while continuing a slow rebirth that followed market share losses to iPhone and Android earlier this decade. Profitable forays into software and licensing have kept BlackBerry afloat since that time, but the stock remains dangerously close to the all-time low posted in 2013.
The company expects revenues between $1.13 billion and $1.16 billion in fiscal year 2020 and continued growth in the 23% to 27% range. So far at least, market players haven't been moved by the results or outlook, with early action stretching the stock about 10 cents in both directions. Bulls will need to show up soon or risk a breakdown through second quarter support at 7.70, the last trading floor before a decline into December's two-and-a-half-year low at $6.57.
BB Long-Term Chart (1999 – 2019)
The company came public at a split-adjusted $1.85 in February 1999 and posted an all-time low at $1.14 a month later, ahead of a steady uptick driven by the expanding internet bubble. The rally posted a parabolic high at $27.87 in March 2000 and turned tail, relinquishing all gains incurred during the company's brief public history before coming to rest just 25 cents above the 1999 low in October 2002.
The stock completed a round trip into the 2000 high in 2004 and broke out, entering a momentum-fueled advance that continued into June 2008's all-time high at $148.13. It broke a double top during the economic collapse, giving up more than 100 points into March 2009's low in the mid-$30s, ahead of a proportional recovery wave that stalled at the .382 Fibonacci sell-off retracement level. It broke 2009 support in 2011 and crashed into the single digits one year later.
A bounce into January 2013 ended at $18.32, marking the highest high in the past six years, while the subsequent decline settled at $5.44 in December, marking the lowest low in the same time period. Nominally higher highs and higher lows into 2019 have drawn a massive basing pattern that has failed to mount the 50-month exponential moving average (EMA) despite multiple breakout attempts, limiting long-term upside to $10.60. Sooner or later, this narrowing band between support and resistance will come into play, generating a multi-year breakout or breakdown.
The monthly stochastic oscillator reached the overbought level for the time in six years in 2017, giving way to a complex sell cycle that persisted into February 2019. The subsequent buy cycle failed below the oversold zone in May, highlighting relative weakness that may continue for the rest of 2019. Taken together with the proximity of long-term support, the stock could post another all-time low before the next strong recovery effort.
BB Short-Term Chart (2015 – 2019)
The on-balance volume (OBV) accumulation-distribution indicator posted 2013 highs and lows that haven't been challenged in the past six years. It dumped to an intermediate low with price in 2015, while the subsequent accumulation phase stalled in 2017, months prior to the January 2018 rally peak. OBV has traded sideways in a narrow band since that time, pointing to apathy in the tenth year of an economic expansion, raising the odds that it will break down in the next bear market.
The short-term trading crowd should watch the June 3 low at $7.70 if aggressive sellers take control after the opening bell because a breakdown will trigger a second violation at the .786 Fibonacci retracement level of the 2015 into 2018 uptrend. In turn, this bearish action would raise the odds for a 100% retracement into the 2015 low at $5.96, which is sitting just 52 cents above 2013's all-time low.
The Bottom Line
BlackBerry earnings failed to stir buying interest in Wednesday's pre-market, exposing the stock to negative cycles that could generate even lower prices in the coming weeks.
Disclosure: The author held no positions in the aforementioned securities at the time of publication.