IBM International Business Machines Analysis March 2016 (W,M,Q)
Created on Sunday, 20 March 2016 14:35
Written by Austin Galt
International Business Machines Corp (IBM) is an information technology company and is listed on the New York Stock Exchange (NYSE) with a market capitalisation of just under$145 billion. Price last traded at $147.09.
Let’s take a bottom up approach to the analysis beginning with the weekly chart.
IBM WEEKLY CHART
Price has shot up in recent weeks and the move looks decidedly impulsive suggesting the low at $116.90 is the end of the bear trend.
The two horizontal lines denote previous swing highs and price has already taken out the first level. The second level stands at $153.15 and price taking that out will just add extra confidence that a new bull trend is in play.
The Bollinger Bands show price back up at the upper band and we may see price push a bit further up into this band before correcting. When price does eventually correct I favour a deep retracement in line with first corrections in new bull trends and we may well see price back at the lower band to put in a higher low.
I have drawn a Fibonacci Fan from the all time high of $215.82 to the first lower low. This shows the price finding support at the 88.6% angle for most of the way down. The final low was once again right around this 88.6% angle.
The RSI is making new highs which is bullish and, given it is now in overbought territory, a correction should be just around the corner.
The MACD indicator is bullish although the averages have diverged somewhat and a correction shortly will rectify that.
IBM MONTHLY CHART
The Bollinger Bands show price has zoomed up from the lower band to be just shy of the middle band. Perhaps that is where resistance comes in and sends price back down to put in a higher low before the uptrend rally lets loose.
The lower horizontal line denotes the previous swing low level at $149.52 and that may provide some resistance for price.
The upper horizontal line denotes the previous swing high level at $176.30 and price needs to crack above there to confirm a bull trend is in play at the monthly level.
I have drawn a Fibonacci Fan from the 2008 low to first higher high and this fan has shown some nice symmetry with price. It shows the bull trend generally being contained between the 23.6% and 38.2% angles. Price then broke support from the 38.2% angle before rally one last time to put in the final high just below the 38.2% angle. Since then the 61.8% and 76.4% angles provided support on the way down with the final low right around support from the 88.6% angle.
I have added Fibonacci retracement levels of the move up and the final low has clipped the 61.8% level which is a common set up for low.
The RSI has shot up and is looking strong while the MACD indicator has just made a bullish crossover.
Let’s finish up with the quarterly chart.
IBM QUARTERLY CHART
I have drawn a Fibonacci Fan from the 1993 low to 1999 high. It shows the 2002 low and subsequent lows finding support around the 76.4% angle before price rocketed up into the final high in 2013 right at resistance from the 50% angle. The recent low was right back around the 76.4% angle which has provided such solid support previously. I now favour price to make marginal new all time highs with the final high back up around the 61.8% angle. Let’s see
I have added Fibonacci retracement levels of the move up from 2002 low to all time high and the recent low was right around support from the 61.8% level.
The Bollinger Bands show price pushing deeply into the lower band and I am now looking for a move back to the middle band and beyond.
The RSI already shows a bearish divergence in place and that led to a significant decline. I would now like to see price make new highs and set up a triple bearish divergence which sets of the decline of all declines.
The MACD indicator is bearish although the averages appear to be starting to curl back up so a bullish crossover shouldn’t be too far away.
Summing up, I believe the bear trend to have run its course and we are currently witnessing the first leg higher in a new bull trend.
Disclosure – I have no financial interest in IBM.