International Business Machines Corp. Stock Working To Break To The Upside And Prove Bears Wrong

The last time the International Business Machines Corp. IBM story was covered on August 21, technicians noted that the bears would remain in control as long as the stock did not close above the $191.90 level.

As long as that level held up as resistance, they said, a move down to the $171 - $179 range was to be anticipated.

However, they pointed out that any break above that level would likely lead to more upside in the short-term.

How Has IBM Performed Since?

IBM shares managed to take out the $191.90 level and progressed as high as $194.13 before digesting some of the gains. That digestion took the stock back down to $189.51 on September 8, before IBM began to press higher once again.

Now, IBM is facing resistance at the $193.85 - $194.13 level (the highs from August 27) with the ultimate test coming at the $196.40 level from July 28. If the bears are to have any hope of winning in the intermediate-term, they will need to make sure IBM does not close above that July 28 peak.

If they can manage to hold their ground at the $196.40 resistance, technicians say the downside targets for the stock would come in at $179.50 and $173.04.

If they fail and the stock conquers $196.40, technicians say the next upside target would come in at the 2014 peak of $199.21.

What Does The Technical Action Reveal?

IBM is clearly not in “leadership mode” right now. Rather, it is a huge company trying to play catch up with its younger technology brethren in terms of growth prospects.

Of course, with lots of brainpower in its ranks, there is always the chance it can create its way to growth. However, a stock that trades under $196.40 is not reflective of the company's success related to those efforts.

A breakout above that level would send a message to IBM's detractors that betting against the stock is a losing play.