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Trade: PALM short 2-3-09

Palm closed at 7.47 today and the MACD has crossed on the daily chart. By mid-January, the stock had flown high on the PRE news up to 8.39. It's based since then, which is actually positive as the markets have fallen.

There is still strength in Palm's move but moving from $1 to $8 in 6 weeks suggests a pullback. RSI crossing back under 70 suggests the time is imminent. There is a gap from 4.5 up to 5.25. First test will be to 6.5, then possibly 5.25. It will likely take longer to retest to 4.5.

Michael Shulman suggests that>
A cult stock that recently skyrocketed and attracted a lot of sucker money is Palm (PALM). The pioneer of the PDA, this company has been killed by the Research In Motion (RIMM) BlackBerry and the Apple (AAPL) iPhone. And the new Palm Pre is not going to change anything. The stock has climbed off a bottom of $1.80 to around $7, in part due to massive short covering. The company is a dead man walking, regardless of its new tinker toy. Do you really think this cash-poor outfit can go head to head with Apple and RIMM? Don't be a sucker.

Ignore those people pounding the table saying these three stocks are cheap. KB Home, Ruby Tuesday and Palm have further to fall. Avoid these names or, even better, short them by purchasing puts options.
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