IBM Stock Surges, Has Room to Run

IBM (IBM)  stock surged 3.5% on its heaviest upside trade in months on Thursday. This upgrade-inspired breakout drove the stock past a very heavy resistance area. In mid October the stock suffered a staggering hit following its third-quarter earnings report. 

IBM fell over 3% in the early going on Oct. 18 before reaching its 200-day moving average.  The stock has been stuck in a narrow range just below the earnings-inspired breakdown gap ever since. 

With yesterday's powerful surge, IBM has left behind a very solid layer of support. The stock now has plenty of room to extend a new rally leg and is far from overbought. Patient investors should take a much more positive view of the stock now. 

A run past the $165 area, which marks the 2016 highs, seems very likely. Once past this big hurdle IBM will be on course for a run all the way up to its 40-week moving average near $170. Big Blue has been trading below this declining long term indicator since the third quarter of 2014.

As the current breakout develops investor should key on the $158.50 to $156 area. This is a very solid support zone that includes the October high near the upper band and Thursday's breakout gap near the lower band. A dip back do this zone will offer a low-risk entry opportunity. 

A Special Invitation

It's not how you voted, it's how you invest. So how can investors win in the wake of this historical election? If you're planning to be in New York on Tuesday, Dec. 6, you are invited to join senior editors from TheStreet and our special guest experts for a cocktail party and lively conversation about the outlook for the U.S. financial markets. Which companies and sectors are poised to profit? What shocks and opportunities await investors in the new year? Listen to and meet our panelists: Lew Altfest, CEO of Altfest Personal Wealth Management; Barry Ritholtz, founder of Ritholtz Wealth Management; and Larry Siegel, director of research at the CFA Institute Research Foundation, with moderator Robert Powell. This evening event is free and will be held in midtown Manhattan. Reservations are required. For more information or to RSVP, please email events@thestreet.com

At the time of publication, Cramer's Action Alerts PLUS had no position in stocks mentioned.

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