Todd Gordon Is Bearish On International Business Machines

Todd Gordon of TradingAnalysis analyzed on

market action in

. He compared the performance of the S&P 500 with the stock and concluded that

started to struggle and diverge from the index in mid-2013. Gordon believes that this is a warning sign and that the stock should trade lower as the market pulls back. Gordon noticed that IBM formed a death cross pattern, which happens when 50-day moving average crosses below 200-day moving average. Since the pattern occurred, the stock traded sideways and Gordon believes that its next move should be lower. In order to make a bearish bet, Gordon would sell a call spread. Specifically, he would sell the November 145 call and buy the November 150 call for a total premium of $1.83. The breakeven for the trade is at $146.83 and a maximal loss is $3.17.