International Business Machines (IBM) - Get International Business Machines (IBM) Report has been doing well lately, working on its sixth straight day of gains on Friday and hitting its highest levels in a month.
With the recent rally, shares are up 8% from the recent low, as investors prep for earnings on Monday after the close.
On the surface, IBM stock has done well from the March lows, rallying about 40%. It even raided its dividend during the pandemic. However, it lags many big-tech stocks on the rebound.
For instance, Apple (AAPL) - Get Apple Inc. (AAPL) Report and Amazon (AMZN) - Get Amazon.com, Inc. Report are each up more than 80% from the lows, while Microsoft (MSFT) - Get Microsoft Corporation (MSFT) Report is up almost 60%. Even the Invesco QQQ ETF (QQQ) - Get Invesco QQQ Trust Report is up far more than IBM, up 57% from the lows.
Trading IBM Stock
To put it simply, the charts here are a total mess. In February, IBM stock underwent a powerful pop into the $150s, before getting caught up in the selloff. Shares broke below $100 in March before rebounding into the $115 to $125 range.
Stuck there now, we just don’t have enough clarity to make a conviction call in IBM. After earnings though, we may have a more clear roadmap.
On the upside, bulls will gain clarity if the stock can clear and close above $130. Above $130 satisfies a few technical developments. It fills the gap-down from June, clears the 61.8% retracement and puts IBM over the 200-day moving average and range resistance.
If that development occurs, it puts the June high in play near $136. Above that is the 78.6% retracement, near $141.
On the downside, see how IBM stock does with the 20-day and 50-day moving averages. Below puts recent support near $115 and the 38.2% retracement on the table.
Should shares close below all of these marks, bulls may be in trouble. It could put the 23.6% retracement on the table at $104.86.
So what’s the bottom line here? There’s a lot of directionless chop without either bulls or bears gaining meaningful traction. At least we know our ranges, though. Above $130 opens up more upside and below $115 opens up more downside. In between and the chop can continue.