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Trading IBM Earnings - What the Charts Say Now

IBM stock initially gapped higher on earnings, but the stock is having trouble maintain its gains. Let's look at the charts.

Earnings season kicked off last week with the banks. Now we’re getting into tech, even though many will willingly forget about International Business Machines  (IBM) - Get International Business Machines (IBM) Report in favor of FAANG, semiconductors and meme stocks.

But that doesn’t make Big Blue irrelevant.

IBM stock traded higher in premarket trading, then gapped higher by 3.5% on Tuesday. Shares rallied almost 5% on the day before reversing lower.

The company beat on earnings estimates, which helped spur the move higher. However, IBM continues to lack the “it” factor investors are craving.

As one Real Money contributor put it, “IBM has come a long way but has a long way to go.”

The charts leave something to be desired, as several key levels rejected the stock and several key levels are now acting as support. Let’s look at the technicals.

Trading IBM Stock

Daily chart of IBM stock.

Daily chart of IBM stock.

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The day before earnings, IBM stock broke below the 21-week moving average. That’s as the 10-day and 10-week moving averages were squeezing it lower coming into the session.

However, even though support gave way, the key $137 level held as support as bulls bided their time ahead of earnings.

With Tuesday’s open, shares cleared a number of key levels, but the stock was rejected by the 50-day moving average near $145.

It then dropped back below $143, the 21-day, 10-week, 10-day and 21-week moving averages. Phew. All of that is to say, it was harshly rejected from a key area and failed to hold several more key measures.

Despite all the rejection, IBM isn’t completely breaking down either. After all, the stock is still up about 1.7% on the day at $140.30 at last check.

As much as I’d like to see this stock hold the 21-week moving average, I mostly just want to see it stay above $137 and this week’s low. If it can do that, perhaps the bulls still have a chance.

Ultimately though, they need to see IBM clear $145. That puts $150-plus in play and a shot at new highs.

If the stock can’t hold $137, it puts the gap-fill in play at $133.81, followed by the 200-day moving average.