This week we are picking Research in Motion (RIMM) as a stock pick we believe is bound to do well in the bullish economic period we expect ahead of us.  The famous BlackBerry maker has been held down near it’s lowest level since early April of this year.  From April 6th to November 20th of this year RIMM shares have put up a mediocre .73% gain.  Over this same period the Nasdaq has posted a 32% gain.  The biggest reason for this extreme underperformance in RIMM shares was a bad earnings report that took $15 or 18% of the stock in one day.  From this report several downgrades have flowed out of major analyst companies suppressing the companies stock price even further.  Despite the negativity of many analysts, we believe RIMM shares are extremely undervalued and are poised for a run up to at least $70 by the end of this year.  Shares of the company closed Friday’s trading session at $59.72.  The recent recovery led to overly high expectations for its earnings report, but we believe that now that expectations are reasonable again, the stock will over perform.  The smart phone market in which RIMM is a major player, is one market that has continued to grow despite the recession.  This should be reflected in the company’s next earnings report which should help the company shares rebound.  The stock has great fundamentals and is extremely undervalued due to a slew of unnecessary and unreasonable downgrades; thus, Fiscal Frenzy expects Research in Motion shares to rise sharply and strongly recommends it.

Following up on yesterday’s risky recommendation for Universal Insurance Holdings, we are moving on with a technical analysis of a slightly safer stock, Nvidia.  While the conceptual aspects of the company are excellent (it essentially has a monopoly over the graphics card industry) we are purely focusing on the technical elements.

1) RSI: While most other companies have very cyclical movement that tends to always include bullish movement when the RSI hits 30, and bearish when the RSI hits 70, the RSI pattern for Nvidia is much more complex.  As you can see, the last major increase the stock saw began back in July, after it had stalled over the month of June.   As you can see, even though the RSI hit 70, the stock continued to increase and the RSI remained around or even above 70 for 2 and a half months.  The pattern is something we could expect to see now, if we believe that the markets will have enough momentum to carry stocks with them in this most recent rally.  Therefore, while the RSI of 50 may seem a detriment from buying the stock, it actually poses a scenario in which one could expect several months of uninterrupted, robust growth.

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During the last Bull Run, there were very few sectors that were not making profits. With Jobless rate expected to rise there really is little hope for retailers or any other businesses that rely on sales. That includes but is not limited to the auto industry, the technology industry, and the housing industry. Even the porn industry is going to have trouble, but that is no reason to give them a bailout. Most recently at the Consumer Electronic Show(CES) and at the North American International Auto Show companies were releasing new innovative products. At CES 2009 there were gadgets ranging from one third of an inch thick TV’s to phones that are disguised as watches. At the North American International Auto Show, cars companies like the Big Three were unveiling green technology in masses. All this sounds very interesting but none of it targets the current economic downturn. These new products are going to cost so much that people just do not have the budgets to stretch themselves out. The auto industry and the technology industry are not even thinking about how people have less buying power and instead using the same business model they have used in the past. Instead companies actually need to be slashing prices. Retail shops can only slash prices to a certain degree, the rest is up to the companies. The housing industry is however slashing prices. I hate talking about housing like an industry because housing should go up when the population grows and not because markets decide it should. Anyways, in a recent KB Home conference call, the CEO specifically said, in California, they are making new homes and selling them at the same price as foreclosed homes. This is a sign that the real estate market is bottoming out. This is not a sign it is going to turn around and skyrocket again. House prices were extremely over inflated and never should have been that high. At the current moment house prices should stay this low for a few years and this time should increase with true demand. What you should have learned today is that very few industries are creating products designed to weather the recession so be wary of what companies you buy, research there future.

Although many people think that Technology has completely and utterly failed during this recession and is no longer something people can invest in the truth is quite different.  The Technology sector has actually mirrorred the S&P nearly exactly and has lost 43 percent in the past six months, just five percent worse than the S&P and less than 4 points worse than the Nasdaq.  This isnt to say however, that there is no merit behind claims that the Technology industry is doing far worse than most other sectors.  The tech giants of Apple, Intel and Sun (Java) have all underperformed the Tech sector.  In general, when the largest and “most stable” companies in a sector underperform the sector itself, it is clear that the industry is not in a good position to be bought.  Tech used to be one of the best sectors to invest in and had outperformed the S&P over the past two years up until Mid July.  Now, more and more tech companies are laying off and all these giants are being sold and sold over speculation that the sector is dead.  The truth is that it is dead for the moment.  People dont have cash, less computers and luxury gadgets are being sold and consumer confidence is worsening by the day.  So when will the sector recover again? Well, you may have to wait until the financial situation of the United States and the world improves, and the financial advice that people base their decisions on is more optimistic.  At that point, people may be willing to spend a little more, be a little less frugal and ultimately drive this dying sector back up to the strength it had just 2 years ago.