International Business Machines (IBM) - Get International Business Machines Corporation Report was taking it on the chin on Friday, down 9.5% after reporting earnings.
The company just can’t seem to impress Wall Street - no matter what it does.
With the decline, shares have fallen 25% from the one-year high. Worse, when not adjusting the price for dividends, IBM is down about 11% over the last decade.
Earnings of $2.07 a share slumped more than 50% year over year, but beat expectations of $1.79 a share.
But as is usually the issue, revenue disappointed Wall Street, slumping 6% year over year and missing analysts’ expectations.
Other large-cap legacy tech players were having a tough day on Friday, with Intel (INTC) - Get Intel Corporation Report down on earnings as well. Oracle (ORCL) - Get Oracle Corporation Report was declining too, likely as Goldman Sachs analysts called it a sell.
The performance of its peers isn't helping IBM’s cause. Let’s look at the charts.
You will notice that this stock never really covered its coronavirus losses like the rest of tech.
IBM stock was contained by its 50-week and 100-week moving averages, as well as the 61.8% retracement. Combined, the group has allowed the stock to close above all three measures just once since June 1.
Now gapping below its 50-day, 100-day and 200-day moving averages, confidence among the bulls must be cratering. If it’s not, it should be.
From here though, we do have some clear range levels to keep in mind.
Largely speaking, the 38.2% retracement has been support at $116.61. A close below this level could put a large decline down toward $106 in play. That level has been significant over the years, while also serving as the 23.6% retracement for the 2020 range.
On the upside, it’s pretty simple: bulls needs to see IBM stock to reclaim the 100-day, 200-day and 50-week moving averages.
Above the 50% retracement near $124.70 and the stock may begin to fill the gap up to $130.
However, it’s hard to be wildly optimistic at this point, given the post-earnings price action. For traders that are optimistic, wait for price to confirm first.