Watson Knocking on the Rally Door

• Posted by Greg Harmon
• on July 11th, 2016

What do you do when you are a robot program and have won $1 million Jeopardy? Well you lay low for a while. Then when all the relatives have stopped asking you go out and party it up like its 2001. IBM ($IBM) stock has done just that. With a long downward trajectory that lasted until February 2016. A 3 year run lower. After a minimal bounce it settled into a range again in April.

It looks like that range has persisted to this day until a closer review. Looking at the details, it has made a series of higher highs since May against a stable low. A broadening wedge. Many will tell you this is a bearish reversal pattern. But this range can resolve either to the downside or the upside. And the preponderance of evidence points to the upside this time.

The chart below shows that expanding wedge, with price at the top Monday. It also shows the Bollinger Bands® giving some room higher. The RSI is in the bullish zone and rising. And the MACD is crossed up and rising. A pattern break here would look for a move up to 169 or so. There is a gap to fill to 172 above. And the Measured move would target about 168. Keep an eye on this. It looks like Watson wants to join the rally.

Want to learn more about Dragonfly Capital Views?
Dragonfly Capital Views Performance Through June 2016 and sign up here.

If you like what you see above sign up for deeper analysis and trading strategy by using the Get Premium button above. As always you can see details of individual charts and more on my StockTwits page.

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

blog comments powered by Disqus