IBM update

ibm jan 20 2016

We have a particular interest in IBM, simple because some investors still consider this stock to be a blue chip. You cannot go wrong with this one as you are always in good company and these guys where 3-piece pin striped suits. Moreover this stock has always behaved a little out of phase, time-wise, with the rest of the market so it offers some diversification (which we don’t care for but the market does).

The top was in now 3 years ago. It was at $201 but elsewhere I found numbers more like $212. In any event this stock is now down by almost 50%. If this is a mid-point, and that fite the most plausible count you could easily go another $70 or so , bringing the stock to something like $50/60 and it could be even lower.

IBM update

Then – Dec. 7, 2012 – and now charts as usual;

ibm dec 7 2012 vbibm jan 1 2015

If there ever was such a thing, this is the quintessential blue chip stock par excellence. It is also fairly unique in that it is one of the very few DOW stocks to record negative (stock price) returns two years in a row. This flies in the face of the broadly accepted “Dogs of the Dow” MO whereby you are supposed to buy the bad performers at the end of a year as they are bound to regress to the mean the following year. For 2 years now this has not worked as the stock has lost about $60 or a little less than 30% over that time period.

    Oddly, these guys, or girls, have done everything right, all 431,000 of them. First they are owned by such celebrity investors as Warren Buffet which is roughly the equivalent of being on Oprah’s favourite book-list. Next they buy their own shares by the truckload which obviously does wonders for the “earnings per share” metric. To be able to do this they borrow un till the cows come home, which , of course, meets with the warm approval of the Fed. that specifically keeps rates low for this purpose. Then they have learned to live in the “now”, carpe diem if you wish, rather than dreaming about an uncertain future. They invest about 1/2 of what companies like this typically do in research and development.

    But it seems like the world does not know what they are doing, what their purpose in life really is, and lately it would seem that they don’t either. The EW target remains far below the present level and despite a good deal of ambiguity the best EW count suggests that we are in a wave 3 down which is not yet complete. Look for $90 as a minimum.

IBM update

Back on Jan 7 we confidently predicted this stock would not trade above $195. Of course it did, reaching about $210 or so. Nevertheless the charts were pretty clear and now, almost a full year later the stock is still at $190. Here are the charts;

IBM dec 7 2012 bibm dec7 2012 s

To get a better view of the big picture look at the previous blog. From the chart on the left it is clear that this 5th wave, coming from $80 in late 2008, has broken out of a channel that has worked well for the past 3 years. From the detailed chart it is furthermore clear that the top was reached by way of a wedge and that the initial leg down was a 5-wave move. From this one can conclude with near certainty that , at the very least, a second leg down should develop in the near future, targeting roughly $175. However, it is far more probable that this is the start of a more serious bear market for IBM that has the potential to cut the stock by half , or more. Once again we would be sellers, perhaps after the bounce. More detail below;

ibm dec 7 2012 vbibm dec 7 2012 mb

The wave count shown on the 40 year chart is probable wrong as the 5th wave probable started in late 2008, after the “thrust” from the triangle had returned to the apex,  but this shows better.

IBM, update

ibm oct 17 2012

Starting from about $194 we thought this stock was done on the upside. Too early perhaps but it is down almost $8 overnight and may have started the climb down. This is a momentum stock and a blue chip supposedly. At $250 bln. capitalization it is definitely one of the “generals”. Watch the trendline at about $200.