I traded RIMM in the aftermarket today.  It was a bit of a roller coaster ride.  Initially our “chirp guy” (person who reads breaking news over a speaker) said they beat their earnings estimate by around 20%.  I have a rule in the after hours when trading a momentum stock.  If they beat estimates by more than 10% I buy.  If they beat by 20% I buy and don’t sell!  Unfortunately,  our “chirp guy” who is somewhat of a moron got the news wrong!  RIMM only beat the estimate by around 5%.  I went from being up $1.50 on the position to being down $3.00 very quickly.  But then the real trading began.

While I was trading RIMM in the after hours I was trying to ascertain what the bigger players were doing in the stock.  At the same time of course I was trying to make money 🙂  The first great piece of information I received was after the stock had already bottomed at around 71.50 and traded back above 72.  I observed a hidden buyer refusing to let the 72 bid drop by more than a few cents.

The stock at this point had sold off 4 points in the after hours and was hanging out at a key support level that was established in early May.  I know that this buyer was legit because each time the bid dropped I would hit out of my long position of 2,000 shares and I would always get a print no more than a few pennies below 72.  The game the buyer was playing is called “drop the bid so people will sell me more stock”.  the buyer got me to play this game twice before I started to buy as well.

My plan was to stay long until at least 73 which had been a key support level in the after hours.  Once RIMM traded above 73 it slowed down.  But the hidden buyer was still there attempting to accumulate more stock.  Some more time passed and RIMM moved up to 73.80 where there was quite a bit of selling.  Then there was some more selling at 73.90.  At this point I had to leave the desk to give a lecture to our new class on technical analysis, so I asked Gman to watch RIMM and to get long if the seller lifted 73.90.

When I returned to the desk about 30 minutes later RIMM was at 76 and had traded as high as 76.50.  I observed it for about another 45 minutes until 7pm.  It simply traded between 76 and 76.50 with no one committed to selling it below 76.

The after hours price action in RIMM was very bullish.  After dropping over 5 points it was accumulated all the way back up to today’s closing price.  There is a good chance it will trade significantly higher tomorrow.  I am going to look for resitance at 78, 78.40 and 79.  If I can pick up some shares in the premarket at 75.50 I will.  If it has one of those crazy RIMM down moves on the open then I will look to be aggressively long at 74.

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