There's a similar setup shaping up in
(IBM - Get Report)
right now -- it's just not quite as far along.
Right now, IBM is forming an ascending triangle bottom, with resistance at $200 and uptrending support right at the 200-day moving average. While the ascending triangle typically occurs when shares are in an uptrend (as with CVS), IBM has been in a downtrend since the start of May. Ultimately, the particulars of the pattern are a whole lot less important than what's causing it. And for an ascending triangle, what's causing it is horizontal resistance and uptrending support.
$200 is an important psychological level because it's a large round number. For that reason, it's a price level that investors tend to notice, and a place where there's an increased likelihood of sellers looking to take gains and exit their trades because IBM looks "expensive". But psychological resistance levels like that also have a tendency to get broken easily.
When $200 resistance in IBM breaks, we've got a buy signal on our hands.
IBM, one of
Ken Fisher's holdings
, shows up on a recent list of
10 Century-Old Blue-Chip Stocks Still Earning Their Keep
. To see this week's trades in action, check out the
Technical Setups for the Week portfolio
-- Written by Jonas Elmerraji in Baltimore.
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