If You've Got The Stomach, Short Nokia

If the volatility and recent rise of Nokia Corporation (NYSE: NOK) is enticing, then short the stock. The recent price movement has certainly set up that trade. Nokia Corporation is up 44.02% for the last month of market action and 9.96% on the last week.

That said, it is, admittedly, difficult to figure out exactly why the stock is rallying. Since April, Nokia oversaw a disastrous product launch with its Lumia 900, which was supposed to revitalize the company. Its partner, Microsoft (NASDAQ: MSFT), introduced its new Windows 8 OS without including any compatibility for Nokia's existing product line. In addition, Finland's Prime Minister flatly refused to help the company, which was once the nation's favorite son.

Makes No Sense
There's nothing in the margins or on its income statement to justify any confidence in Nokia. Indeed, the company is losing money with a negative profit margin of 12.77%. Its return-on-equity is a negative 32.59%. Sales growth on a quarterly basis is off by 18.68%. Over the same period, earnings-per-share growth is down by 283.06%. Debt is high. The short float is just under 5%.

The future is hardly bullish. On August 29, Samsung (PINK: SSNLF) will introduce its new Galaxy Note while Apple's (NASDAQ: AAPL) latest iPhone (5) is likely due in September or October. Both of which are expected to captivate much -- if not all -- of the consumer-market's attention and dollars. Early next year, Research-in-Motion is rolling out its overdue Blackberry (10), which -- RIM hopes -- will still appeal to the business community.

Nokia Corporation bottomed out in mid July and has since rallied sharply. There have been several pullbacks, though. At present, Nokia Corporation is trading 32.93% above its 20-day moving average and 16.10% above its 50-day moving average. Still, it's 35.42% below its 200-day moving average. Candlestick patterns have been very short and positive, hardly a bullish pattern in light of the pullbacks during the previous weeks of trading. The most recent analyst action on Nokia was a sell recommendation reiterated on July 16 by MKM Partners with a target price of $1.50.