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 finding support at the rising 50 day SMA after a pullback from a retest of the pre-Covid high. The RSI is reversing higher with the MACD leveling as it turns negative. There is support at 138.50 and 134.50. There is resistance higher at 143 and 146 then 149.75 and 151.50. Short interest is moderate at 3.3%. The stock pays a dividend with an annual yield of 4.66% and has traded ex-dividend since November 9th. The company is expected to report earnings next on January 23, 2023.

The December 30 Expiry options show big open interest at 140 and 136 on the put side and it is spread from 138 to 155 on the call side. In the January chain open interest is biggest at 140 on the put side then 145 and 135. On the call side it is big at 135, 140 and 145. The February chain has biggest open interest at the 140 strike on the put side and then it tails to 125. On the call side it builds from 130 to 150.

IBM, Ticker: $IBM

Trade Idea 1: Buy the stock on a move over 143 with a stop at 138.

Trade Idea 2: Buy the stock on a move over 143 and add a January 140/135 Put Spread ($1.40) while selling the January 27 Expiry 152.50 Calls ($1.05).

Trade Idea 3: Buy the January/February 150 Call Calendar ($1.80) and sell the January 135 Put ($1.00).

Trade Idea 4: Buy the February 130/145/150 Call Spread Risk Reversal (10 cent credit).

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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 with 4 trading days left in 2022, saw equity markets showed some divergence. The SPY and IWM put in consolidation weeks, saved by end of week moves higher while the QQQ continued to move lower and is approaching a retest of the year’s low.

Elsewhere look for Gold to consolidate around 1800 while Crude Oil consolidates in the downtrend. The US Dollar Index looks to pause in the downtrend while US Treasuries resume the move lower. The Shanghai Composite looks to have reversed to a short term downtrend while Emerging Markets consolidate.

The Volatility Index looks to remain in a normal range making the path easier for equity markets to the upside. Their charts continue to look weak, especially the QQQ on the longer timeframe. On the shorter timeframe both the IWM and SPY are trying to consolidate and possibly put in a bottom, while the QQQ diverges as it continues lower. 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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