IBM

IBM aug 27 2012

Back in Jan. 7th 2012, half a year or more ago, we confidently predicted that would not trade above $195. The actual high was $210,69, so we were wrong again. The argument then was that for most stocks the 3d wave is by far the strongest and longest, even if that is not an absolute requirement. Many exceptions exist but for the most part they occur with commodity related stocks, not with the IBM’s of this world and therefore it is reasonable to assume that a 5th wave will NOT be longer than a 3d wave. This still may be a correct assumption as it all depends on where you start the 5th wave. We had originally assumed that there was a triangle from 1999 to 2006. In retrospect it would seem more appropriate to assume a large flat all the way to 2008/9. This has the effect of pushing the starting point a little higher and making the 5th wave channel bound within a very narrow range. The speed at which the stock travels from one side of the channel to the other is the same for the 96 to 99 move and the 09 to 12 more recent one, both being about $100 in 3 years.  The very clear periodicity we pointed to earlier still applies when using the mid point of the B-wave (2006). Roughly every 6+ years this stock changes direction and loses at least half its value. The $210 high was probable such a turning point.

For most of the past century this company was probable best known to outsiders for its dress code. Dark blue or grey 3 piece suit, white and only white shirt and an unobtrusive tie. Now few people have any idea what they stand for or do. Even the, very heavy, electronic typewriter that seemed to grace just about every office has disappeared from the face of the earth.