Various news outlets reported last night that Microsoft (MSFT), Nokia (NOK), and Amazon (AMZN) all considered acquiring Research in Motion (RIMM) earlier this year before deciding they wanted no part of the Blackberry company. Naturally the stock market took these rejections as unambiguously good news, sending stock in RIM over 10% higher.
Does the rally signal the end of Research in Motion's stunning decline and a chance to buy the stock? My instinct says "abso- #@$%#@*-lutely not." For a more balanced answer Breakout turned to our old friend Jon Najarian, co-founder of TradeMonster.com.
The former pro-footballer came up with three good reasons a stock would trade higher on the news that nobody wants to own the company:
1.) Huge trading volumes yesterday had "flushed out" the most stubborn of bulls. In one of Mr. Market's favorite recurring bits of irony, when a stock starts really falling, it typically can't recover until every last shareholder has given it up for dead. Once that happens the stock has run out of organic sellers; by the law of supply and demand that means higher prices.Read More »from RIM Shares Soar on Takeover Rumors: Buy or Beware?