4 Trade Ideas for IBM: Bonus Idea

Here is your Bonus Idea with links to the full Top Ten:

IBM, $IBM, comes into the week consolidating in a descending triangle after a strong move higher. This is happening just short of the full retracement of the pandemic drop. The triangle can resolve in either direction, but we favor a continuation of the prior trend, which is to the upside. If it does this would give a target to 153.50 initially then 159.50. Both would levels not seen since early 2018. The RSI is pulling back in the bullish zone with the MACD crossed down and dropping but positive.

There is support lower at 146 and 143 then 141 and 139 before 134.50. Resistance higher sits at 149.75 and 151.50 then 155 and 158 before 160 and 163.30 from 2018. Short interest is moderate at 3.4%. The stock pays a dividend with an annual yield of 4.49% and has traded ex-dividend since November 9th. The company is expected to report earnings next on January 23, 2023.

The December options chain shows biggest open interest at the 145 and 140 strikes on the put side, and from 150 to 155 above, but lower at 145 and 140 on the call side. The January chain has large open interest spread from 145 to 120 on the put side. It builds from 120 to a peak at 140 then tails to 170 on the call side. The January 27 Expiry chain is just getting started. The February chain is the first to cover the earnings report with sizable open interest. It shows top open interest at the 140 strike and then tailing to 110 on the put side. On the call side it is spread from 130 to 150.

IBM, Ticker: $IBM

Trade Idea 1: Buy the stock on a move over 150 with a stop at 146.

Trade Idea 2: Buy the stock on a move over 150 and add a January 145/140 Put Spread ($1.50) while selling the February 165 Calls ($1.00).

Trade Idea 3: Buy the January/February 155 Call Calendar ($2.00) and sell the February 130 Put ($1.75).

Trade Idea 4: Buy the January 145/135 Put Spread on a move under 146.

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After reviewing over 1,000 charts, I have found some good setups for the week. These were selected and should be viewed in the context of the broad Market Macro picture reviewed Friday which heading into December options expiration, saw equity markets have rolled again, threatening to reverse their short term uptrends.

Elsewhere look for Gold to continue its short term uptrend while Crude Oil continues the downtrend. The US Dollar Index has found short term support in its downtrend while the US Treasuries short term uptrend has stalled. The Shanghai Composite looks to continue its short term move higher while Emerging Markets consolidate in their move higher.

The Volatility Index remains in the normal zone but higher making the path slightly more difficult for equity markets to the upside. Their charts look stronger on the longer timeframe, especially the SPY and QQQ, but with bits of weakness showing up. On the shorter timeframe the IWM is leading a reversal lower while the QQQ and SPY hold over support for now. Use this information as you prepare for the coming week and trad’em well.

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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.

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