PALM Watch

I was amused to read that Jim Cramer a few days ago said he was bearish on PALM. A courageous call, Jim. At 59% below the high on the three-month daily chart. I guess some bearishness is in order.

	trend	adx	psar	pps	macd	macd trend	sto	sto trend
PALM $5.06

For a chart-driven trader, PALM is one of those interesting cases where rumor and news are all.


If a firm buyout offer is placed on the table  -- Lenovo (LNVGY) is said to be the last remaining Asian suitor -- then the offering price will set the stock price, regardless of support and resistance.

Today's news that Lenovo's competitor for a PALM acquisition had dropped out caused a modest rise in PALM's stock. What LNVGY -- Lenovo's low-volume ADR on the NASDAQ -- gapped up for a second straight day and traded  8.5% above Wednesday's close.

Until a buyer emerges, I would argue that PALM's normal technical indicators remain in play. Support and resistance levels mark areas where shares were left behind in a price swing. Those shares still on the table limit prices moves until that supply is drained away by buyers.

You are here:

• Reversal
• $7.21, +42.5%
• $6.47, +27.9%
• $6.29, +24.3%
• $5.75, +13.6%
• $5.36, +5.9%
• Now $5.06
• Reversal
• $4.66, -7.9%
• $3.80, -24.9%
• $3.65, -27.9%

PALM's support and resistance staircase has some very large steps, which povide some very large opportunities if the price continues to enjoy free play.

I own shares of PALM, the remnant of a covered call gone bad. At this point my basis is $8.69, so my hope of a profit lies in a 70% buyout premium -- hardly likely.

It should be noted that PALM has been at these low levels before -- in January 2009, October 2008, and back in 2002, 2003 and 2004.

It seems to be a strangely resilient company. So, while avoiding "darkest before the dawn" cliches, I'm not writing PALM off yet.

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PALM is followed in the daily Watchlist, which is posted beginning around 2:45 p.m. Eastern. Look for it at www.timbovee.com.

Abbreviations:
psar - Parabolic Stop and Reverse
adx - Average Directional Index
pps - Person's Proprietary Signal
ma20 - 20-day moving average
macd - Moving Average Convergence-Divergence
mfi - Money Flow Index
sto - Fast Stochastic

About the glance: The colors indicate the state of each signal.

• trend: Determined by the 5-day moving average, green for up, red for down, yellow for sideways
• adx: orange for above 30-up, blue for 20-down, purple for in the middle. Red is most prone to whipsaws
• psar, pps, macd: green for bull mode, red for bear
• sto: green for overbought, red for oversold, yellow for the neutral zone.

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