IBM Approaching Dual Support Level After Disappointing Earnings

By The Wall Street Fox Tuesday, January 19, 2016
 
Shares of IBM are down nearly 4% to $123 in after hours trading following a poor earnings report. The 105 year old company reported its 15th consecutive quarter of revenue declines and it still hasn't figured out how to meaningfully monetize Watson. The stock currently yields 4.06%.
 
Fundamentals remain weak and the stock is down more than 40% from its 2013 high of $215. Apparently stock buybacks aren't enough. Maybe they should buy Twitter (joke).
 
Despite the deteriorating fundamentals, IBM technicals are beginning to look attractive. IBM is approaching a dual support level: A long term trend line dating back to 1993, and the old highs of the dot-com bubble and 2008 housing bubble. Old resistance tends to act as new support.
 
A potential trade idea: Long IBM with a tight stop at $120, and look for a $150 exit target. Given the $123 after hours price, you are risking 2.5% to potentially gain 25%.
 

The Wall Street Fox

The Wall Street Fox utilizes fundamental and technical analysis to generate investment ideas. TWSF holds a MBA, and is currently preparing for the Chartered Market Technician (CMT) designation.

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