Hi GottaRun,
IBM is dead money. It has potential as a short.
The reason:
IBM failed convincingly at the 200 sma on a professional gap down. That means all the big boys hit the exits. They won't be back anytime soon. IBM cannot rally on retail trading. Retailers are along for the ride at best.
After the failure, IBM went on to fail at solid chart support. the failure was confirmed by strong selling down to chart support. IBM then failed at this very important chart support at about $85. But if that wasn't bad enough, IBM then went into free fall mode with a professional gap down. Then, the final nail in the coffin: a bear cross (50 sma/200 sma crossover) occurred in the middle of April:
stockcharts.com[w,a]daclyyay[dd][pb200!b50][vc60][iLg!Lp14,3,3]&pref=G
This is one horrible looking chart.
Here's the 3 year weekly chart:
stockcharts.com[w,a]waclyyay[df][pb10!b40][vc60][iLg!Lp14,3,3]&pref=G
I think IBM is headed for a test of old chart support at 70. This should occur in the next several months. I don't think IBM is going to see it's former highs for several years, and likely will present numerous short opportunities as it rallies into resistance and fails there repeatedly in the coming year.
The only positive thing I can see in IBM's chart for a long position is the huge surge of volume at the bottom after the monster gap. However, when IBM again approached these levels, a similar volume surge was not seen. This is not a good omen at all.
IBM is relatively oversold, but can and will get quite a bit more oversold.
139.142.147.218
There are early and unconfirmed buy signals in OBV and Williams, but I would not suggest a long position in IBM.
Instead, I would suggest shorting IBM as soon as the 40 sma moves down far enough. I think what we'll see is IBM rallying into the 40 sma and getting turned back, and I think this pattern will repeat itself, providing multiple good short entries.
T |
