Shares of IBM (IBM) - Get Report have been holding near a very solid support zone for the last two and a half weeks. This key area, which includes a series of monthly highs, rests between $154 and $153. Up to this point, patient investors have shown little interest despite the low-risk entry opportunity. If Big Blue is not able to gain a bit of traction soon, a deep selloff could be on the way.
Earlier this month, after a four-day winning streak, IBM was set up well for a run back up to the 2016 peak. Less than two days later, the stock was putting in fresh September lows, leaving behind an ominous failed breakout in its wake. The stock drifted lower, but further downside was limited by the support zone near the April and May highs.
Since reaching this area two weeks ago, the stock has traded in a very narrow bear flag-type range. A downside resolution to this consolidation could release quite a bit of downside momentum.
In the near term, IBM investors should take on a more cautious view. The stock closed yesterday still within its recent range, but a clear break of the $153 level could do considerable damage. With overhead pressure building and a lack of bullish interest over the last few weeks, IBM is looking increasingly vulnerable.
If a breakdown does develop soon, there is little support in place until the 200-day moving average near $146.50 is reached. A base here, along with a return to oversold territory, may offer the next buying opportunity for patient investors.
Meanwhile, Paul Price of Real Money Pro, our premium site for active traders and professional investors, says fellow "old-tech" stock Intel (INTC) - Get Report looks poised to stagnate or fall. Click here to check out his analysis and get a 14-day free Real Money Pro trial.
This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.