IBM Is At An Inflection Point

10/24/17

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It is no secret that I haven’t really been a huge fan of IBM (IBM), well, ever. I’ve found the company’s “strategy” of essentially ignoring the dying legacy business in favor of buybacks that aren't working and focusing instead on its strategic imperatives to be a losing battle. Indeed, you needn’t take my word for it; just have a look at the chart below. But upbeat Q3 earnings has the stock flying; is this finally the time to buy Big Blue?

We’ll begin with the chart and I think some really important technical progress has been made on a weekly basis. The stock is now well and truly clear of the 200DMA and while the line is still negatively sloped, its downward trajectory is slight. That implies that if buyers can keep the stock in excess of the line for just a couple of weeks, it should turn higher and would then offer up some support. This was evidenced for much of last year as the rising 200DMA was strong support and it could easily happen again.

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