Watson is rising to fill the gap

• Posted by Greg Harmon
• on May 20th, 2015

IBM ($IBM) was the punching bag for the stock market after making a high in 2013. The final blow came when the reported earnings in October 2014 and gapped lower. All the talk of Watson winning Jeopardy and being the the future went dark. The interest in their CEO Ginni Rometty and whether or not she was going to become a member at Augusta fell off. The company and the stock was left for dead.

The price of the stock moved sideways between 152 and 164 for 6 months. But just after Easter that changed. The price rose above the range and started into that gap from October. Now the price has been moving in a tightening range against resistance at 175 and rising support at the 20 day SMA, making an ascending triangle.

The target for a break above the triangle would be a move to 187.50. That would do more than just fill the gap to 180.22. Price could just fall back at resistance again, but there are indicators that support a break. First, that 20 day SMA rising. Next the RSI is in the bullish range. The MACD stopped falling and is level, near a cross, as it sits at positive levels. And the tightening Bollinger Bands® give it the urgency that a move will come soon.

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