Forgotten by many, the charts for International Business Machines (IBM) - Get International Business Machines Corporation Report will surprise many investors.
That said, before Tuesday's decline — where shares were down 5.2% at the session low — IBM had been trading pretty well.
Knocking the stock lower today was a downgrade and price target cut from the analysts at UBS.
Shares are still down more than 2.5% on Tuesday despite gains in the broader market. However, the bounce is giving us a bit of a mixed bag here.
On the one hand, IBM is breaking below some key short-term moving averages and trends. However, after six straight weekly gains, the stock held some key long-term levels on the dip.
Now it’s bouncing and that leaves the chart showing two very clear levels to keep an eye on.
Trading IBM Stock
Looking at the weekly chart of IBM stock, one can see today’s strong bounce off the lows.
However, it’s also where IBM stock bounced that is key.
After testing down into a cluster of weekly moving averages — including the 10-week, 21-week, 50-week and 200-week — shares found a bid. It also came on a test of the 61.8% retracement from the long-term range.
Now here’s the key.
IBM must hold this week’s low at $127.97 going forward. If it loses this mark, not only does it lose the weekly low but also loses all of those moving averages it has in this area.
That’s the key downside level, but there’s another key level on the upside too. That’s at $135.
That level comes into play a penny above the December high. It’s important because if IBM stock can rotate above that mark, it will give bulls a monthly-up rotation. Not only that, but it puts IBM above a key downtrend resistance level (blue line).
That opens the door to this month’s high at $142.20, followed by the 2021 high near $146. Above $150 and the range high is in play at $157.44.
While IBM isn’t exactly a go-to trading vehicle for most investors, it does have a pretty well-defined setup. Respect the levels above and traders may do well with this one.