Shares of IBM (IBM) - Get Report have been moving steadily higher in a steep bull channel since the Brexit low. At this week's high, the stock had gained over 15% from the June 27 low. Yesterday afternoon IBM began to send some exhaustion signals and is continuing to do so today.
A healthy pullback would be a welcome event for patient bulls.
IBM's upward pace since the Brexit selling wave ended has been very impressive. The stock has not closed below the previous session's low during this 21-day run. Following yesterday's close below the lower band of its current bull channel, this streak may be about to end. For patient investors, this will lead to a very low-risk entry opportunity vs. current levels.
The breakout above the $156 area on July 12 left behind a major support zone. This important area includes five monthly highs between $153 and $155.50. A drift back down to this area as a healthy pullback develops would offer investors a very low-risk buying opportunity. A well-built base in this area would recharge Big Blue for a refreshed rally phase.
Disclosure: This article is commentary by an independent contributor. At the time of publication, the author was long IBM.