PreMarket Prep Stock Of The Day: IBM

Benzinga's PreMarket Prep airs every morning from 8-9:00 a.m. EST. During that fast-paced highly informative hour, traders and investors tune in to get the major news of the day, the catalysts behind those moves and the corresponding price action for the upcoming session.

On any given day, the show will cover at least 20 stocks determined by co-hosts Joel Elconin and Dennis Dick along with producer Spencer Israel.

For those who don't have the time to tune in live or listen to a recording, Benzinga will highlight a stock of the day that was featured on the show.

Stock Of The Day: IBM

Not all issues participated in Wednesday's rally to all-time highs. Most notable was the rotation from growth to value stocks. In other words, investors were selling stocks with high price to earnings ratio and buying stocks with relatively low price to earnings ratios,substantial cash holdings and pay a dividend.

Perhaps the biggest beneficiary of this rotation was International Business Machines IBM, which posted a $7.22 gain rallying from $149.11 to $156.33. That marked the biggest gain for the issue since Jan. 23, 2019, when it leaped $10.37 ($122.52 to $132.89) on the heels of a fourth-quarter earnings beat.

Original Catalyst

On Jan. 21, the company posted a fourth-quarter EPS beat along with a revenue beat of $173 million. That report instigated a $4.72 rally in the issue from $139.89 to $143.89. In the few days following the report, the issue drifted lower even falling well below the area it closed at ahead of the report ($136.77).

Additional Catalyst

On Jan. 31, the Street was overcome with joy when the company announced that Virginia Rometty was stepping down as President and CEO and was being replaced by James Whitehourst for President and Arvind Krishinba as the new CEO.

That change in the c-suite prompted a $6.96 rally ($136.77 to $143.73). The momentum from that day carried on for another three days and early into today's session when it reached $158.75 and reversed course.

Moving Forward

Despite a large sell imbalance, perhaps from some profit-taking, it still managed to open higher and continued to its highest level since April 17, 2018 when it hit $162 and closed at $160.01. Interestingly, it fell all the $148.79 the following day when the Street was not impressed with its first-quarter beat.

On today's show, it was emphasized that in order for the rally to continue to hold Wednesday's gains and post a new closing high (above $156.33) to keep its momentum going. After its early morning high it retreated to $155.42, but is now trading a lot of stock just above and below Wednesday's all-important close of $156.33.