Not sure if this is worthy of a full post, but since I rarely seem to have many long ideas AND since I have been banging the table on how well my IBM short idea had been working out so far, I thought it appropriate to announce my assessment that the short trade is done on this. It looks like it is worth getting long (in the short-term at least).
First, I will say that the bearish argument can still be made on this stock as it is beneath several moving averages, has been relatively weak to the broad market since the December 2022 peak and could very well continue down to the previous bottom at $118 on October 13. On the flipside, the daily chart shows a successful closed gap from October 2022 by trading beneath $124 as well as the very large volume spike on that day. The last time there was a volume spike that large was the July 2022, after which it traded down a few days before rallying a little over 10% in coming weeks (not a bad return).
On a monthly we can also see that this stock, while not an AAPL or other growth story, is holding its own in a very choppy sideways motion. Does this mean it is “due” for a pop on a monthly and we’ll get exponential growth? Probably not (unless those AI dreams come to fruition and IBM manages to get ahead of the curve). But it also means it probably doesn’t have much room to drop (again, unless some major news comes out).
I think from strictly a technical perspective we have a chance at seeing a short-term bottom and catch a wave back up. I may offset my other shorts by getting some very boring IBM stock in the near term. I’ll be watching to see if this manages to trade a little bit lower and accumulate a little around 120, stop would be beneath $115, targeting about $140 (so about a 1:4 Risk:Reward ratio).
