The expected options price correctly reflected the size of the move after the report which was about 8$ (it closed around 188 and bumbled around the 180 level ). The market proceeded to break the 1820 and sell off hard to sub-1800 causing pretty much most stocks to get dragged down.
The price action in IBM was interesting on Friday as the selling in the broader market continued to accelerate, it was definitely finding some support around 180-ish. I believe that is due to being short-term oversold, the bollinger chart clearly shows oversold conditions and i can’t see higher lows or any other technicals ( or fundamentals yet ) to justify a reversal here…yet.
I tend to be contrarian and buy out long-term as i do think IBM will turn around at some point, several quarters of declining revenue and negative sentiment, everyone hates the stock which is the perfect situation for this 100-year-old stalwart to surprise to the upside…at some point. Big companies, big cash flow, they may not turn around quickly but when they are on the right course, they can be fabulous momentum plays.
On the upside, it’s pretty clear 190 is the hurdle to get through..
Below is another capture on a longer timeframe but still a day chart, as you can see the 200ma is beginning to slope to the downside which is a little unfortunate but here you can see the bollinger where the oversold conditions are currently manifesting.
So next week is an interesting setup, CAT reports Monday and AAPL reports after the close, i’ll post some thoughts on this shortly.
Normally when a stock or the market moves aggressively in one direction, you get a few days of consolidation to digest the move before the next leg begins. Given the sentiment with forex, the rapid broad breakdown on Friday and the fact that a correction was way overdue, we may have a few more days of downside before settling for a bit. Capitulation is not quite here yet, 10% from the highs around 1840 gives us about 1650 or so…that feels too extreme ( who knows right? )….and that’s still quite a drop from here.
There is significant support around 1750-1770 and the rising 200ma daily currently at 1700….i’ll cover this in more detail but i think given the amount of liquidity sloshing around and the fed is still injecting 70 billion plus per month into the market…this ‘correction’ may only be 4-5% or something along those lines…that ties in well with the above. I don’t have a crystal ball and emotions are totally irrational and unpredictable at the best of times..
I’ll have some cash ready to deploy if we get an outright panic going on.