In his latest Dow Thirty weekly report, Founder of Eagle Bay Capital & Market Technician JC Parets, looks into International Business Machines Corp. IBM and presents one chart every investor should see.
According to the analyst, “structurally IBM broke down below this multi-year consolidation and still struggling big time against the S&P500, which is why the relative strength continues to fall off a cliff and hitting 6-year lows.”
He says Eagle Bay “had been looking for a break below or above these converging trendlines to signal the direction of the next move. Since breaking down below support, prices have really fallen off a cliff.” This is why they wait patiently “for confirmation to trigger the next direction.”
In December they had hit their downside target near $155.50, “based on the 161.8% Fibonacci extension of the 2014 rally.”
Parets assures he “would still be selling into any strength towards former support near $172 as this is a broken market with momentum in a bad bearish range.” He adds that “the measured move based on the size of the pattern over the last few years is $148,” and he thinks “we can ultimately see those prices.”
However, based on the firm’s “target hit and nice reversal candles,” Parets believes “a mean reversion is still happening.”
Shares of International Business Machines are up almost 3 percent on Monday, after falling 1.34 percent over the past week.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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