PreMarket Prep Stock Of The Day: Big Blue On The Move

PreMarket Prep Stock Of The Day: Big Blue On The Move

International Business Machines IBM is having its best day since Jan. 25 ($128.82 to $136.10) after its earnings beat. The corresponding price action makes it the PreMarket Prep Stock Of The Day.

Price Action Ahead Of Report: Since April 6, IBM has been in a trading range from $124.91 to $130.58. There have been multiple lows in the $125-$126 area and briefly reached $130.58 on April 14, following a Morgan Stanley upgrade.

A majority of the price action over this period has been in the $126-$129 area. The issue had a good day on Tuesday, canvassing the aforementioned range rallying from $126.17 to $129.15.

Q1 Report: After Tuesday's close, the company announced a first-quarter beat for EPS, $1.40 vs. $1.38, and for sales, $14.2 billion vs. $13.85 billion. Also, the company forecasts 2022 sales to grow to be at the high end of the previously issued mid single-digit growth range.

On a negative note, the company expects an impact of $300 million to annual revenue and $200 to annual profit as a result of suspension of operations in Russia.

PreMarket Prep Take: When the issue was being covered on the show it was trading at the $132 area. Co-host Dennis Dick stated, “After the Netflix debacle, this report was just good enough to attract fund managers, who were looking for something to buy.”

The author of this article somewhat underestimated how high the issue would go. Potential resistance at the pair of highs at the $133 area from the end of March was noted. However, there was limited resistance if that level was breached.

Price Action: After a much higher open ($135 vs. $129.15), the issue reversed course. The ensuing decline found support well ahead of the top of Tuesday’s range ($129.40), only reaching $133.38.

At press time, the issue has continued to make new highs for the session, moving into the $139 handle and passing a trio of highs from early February in the $138.35 to $138.82 range.

The discussion on the issue from Wednesday's show can be found here:

Posted In: EarningsNewsTechnicalsTrading Ideas