Nokia Corporation (ADR) (NYSE:NOK) – Buy near $7.40-60

Nokia Corporation (ADR) (NYSE:NOK) had yet another subdued session with an almost unchanged closing. It lost a meager 0.13%, though the volume at 50 million was double the average volume of 25 million. Regardless of the muted activity, the stock has an “overweight” rating from J.P. Morgan with a price target of $10.80. The analyst Sandeep Deshpande estimates that the company can exceed the consensus estimates by 8.7% in the fiscal year of 2015. The company may not benefit significantly from transactional marginal gains but still the EBIT is expected to rise by 13% on a y-o-y basis.

Volume Price Trend Indicator (VPT) of NOK

Technically, the stock has been trading in a range of $7.40-$8.15 set in the last week of January 2015 and despite the retesting of the upper boundary in the first week of March, the stock actually went nowhere. Some analysts would point towards the contracting nature of the short term price action, suggesting a contraction in the volatility too, implying an impending expansion. As the contracting pattern gets closer to the apex, the time of a breakout comes closer too. The directional clue comes from the chart attached.

NOK

The chart of Nokia Corporation (ADR) (NYSE:NOK) clearly shows the price action of the 18 months to be contained in a slightly slanted channel, roughly with $7 as the lower boundary and $9 as the upper boundary. The proximity of the price with the lower boundary of this long term channel and the inability of the bears to push it down below the support area, suggest that the entire sideways phase can better be taken as a bullish pause than a bearish dominance.

A break above $8.20 will signal firm bullish intent and a possible rally to test the upper boundary of the channel at $9, which is also coincident with a very strong long term supply zone.

 

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Scott Coper

Scott Coper

Coper graduated from the University of Chicagi with majors in political science and journalism.