Early this month, Big Blue pierced the $165 area before mounting a healthy rebound. Similar action followed a week later. But now, with heavy pressure building near this month's peak, IBM is losing its grip. As shares fall further below this support zone, a deep pullback appears on the way.
Since IBM peaked in early May, its two heaviest volume days have been to the downside. Both recent sessions included closes below the declining 200-day moving average. This heavy action has now driven the stock to a very vulnerable position as $165 fades from view. A deep selloff could begin this week and could drive the stock back down to its April low at $153.40. This is the initial support area, but a deeper pullback is likely if selling pressure remains accelerated.
A fall all the way down to the $150 area would re-test the 2014/2015 lows. IBM would violate its March low as this level is reached, but a very attractive buying opportunity would be at hand.
At the time of publication, Morrow had no positions in the stocks mentioned.