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The ABCs Point To More Downside For IBM

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As the broader market heads higher seemingly continuously, IBM's (NYSE: IBM) stock is struggling to even make a new 52-week high – let alone an all-time high.

It has been a long time since IBM has assumed any kind of upside leadership role in the stock market. Nothing about the stock's current action tells technicians that things are going to change for the stock anytime soon.

What The Bears Are Seeing

The bearish crowd out there has not had much on which they can hang their hats recently – with chart after chart breaking higher instead of lower when given a binary choice.

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However, for the duration of 2014, IBM has continuously failed to break any “correction resistance” levels created by the 100 percent Fibonacci price projections for any of the two-going-on-three “abc” upside corrections (see chart below).

Relative underperformance, resistance just above current levels; that's all the bears need to see to become extremely aggressive on the IBM short trade.

That The Bulls Are Seeing

The hopeful bulls are quick to point out that IBM is a perfect candidate for the “catch-up trade” where a previously underperforming stock in a bull market will rise "just to catch up with the crowd."

The bears would quickly classify that saying as "things that desperate people say." The fundamental crowd also points to the fact that IBM is a cheap stock in terms of P/E ratio and other valuation metrics.

How Will We Know Who The Winner Of The Debate Is?

This is a fairly simple situation to analyze. If IBM conquers $191.90 on a closing basis, the bulls will have won out in the short-term and the stock will likely move higher.

If that level holds as resistance, the bears once again will have retained the title and the stock may begin another rough move to the downside – with an eventual target range of $176 - $179.

Stock chart: 
Stock chart

Posted-In: FibonacciTechnicals Tech Trading Ideas Best of Benzinga

 

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