Members Trade Watch: $IBM


We're adding IBM on our watch list as a potential long play. It may be en route for a "trend shift"for the next wave higher as we can see in the chart below. Similar to what we saw with the bottoming-patterns of CMG & AAPL, IBM is showing the earmarkings of a stock that is nearing completion of it's down cycle and we should start to see the risk largely shift to the upside. As we can see here on this monthly chart, the macro patterns shows that IBM has started to break above a key descending trend line. This suggests that a TREND SHIFT is underway.


Let me remind you what happens with trend breaks of huge patterns like this & just reference our buy alert on Boeing back from November 14, 2016 @ $149.62 & now trading above the $180 level. Although BA can very much pullback from here, the larger trend is higher.


So we see something very similar brewing with IBM. What's more, IBM has made its first HIGHER-HIGH within this downtrend since the top of 2013. That's a first step in breaking the downside of this cycle. Furthermore, as part of that HIGHER-HIGH, IBM is sporting a giant inverse head & shoulder bottoming pattern that has been cultivating since 2015. This is high probability reversal pattern that tends to be breakout towards the upside more often than not. Statistically these patterns tend to play out successfully towards the upside. So this is an important one to watch. If and when we see a breakout from this neckline area of $173 then this will set the stage for a significant breakout rally. The text-book, upside target shows a forecast of IBM reaching towards $250+. When & how long it take for this to happen is not easily discerned. IBM is a conservative slow moving stock so $250 could be something like 2 years away. Either way ,we'll want to ride that wave when we get further confirmation that the rally is underway. Take a look below at this weekly chart showcasing this giant Inverse Head & Shoulder Bottom pattern:


However, we're not yet there to initiate a formal buy alert. It could be weeks to months before we get a formal buy alert on this name. As we can see in the chart above, the right shoulder is not yet formed. It's getting there but we want to see the right shoulder ROUND out towards the upside and break above the neckline area of $173. Also, we see weakness show up on the smaller time frames as well. BotTrigger is looking at several time-frames in helping vet out a formal buy alert and when we look @ IBM it's showing the following Buy/Sell signals on these 3 key time frames:

Monthly Chart (aka Primary Term Trend)- Buy Signal

Weekly Chart (aka Intermediate Term Trend) - Sell Signal

Daily Chart (aka Near Term Trend) - Sell Signal

We give the most importance to the Monthly time frame to discern the macro trend direction. The monthly time frame is our PRIMARY TERM TREND. But when we see the smaller time frames not yet conferring with the Monthly then it usually means that there is more weakness to flesh out first. And that's totally fine. We see the same thing happen over and over again on stocks that are bottoming. Eventually, the only way a full fledged rally takes place is when we see all 3 time frames confer with one anther in bull mode showing a buy signal. It can't happen any either way. However we do finesse the signal and seek to advance it. We did this on CMG & AAPL for example. The monthly was showing a sell signal, but we were in when the daily & weekly showed buy signals. So we were in BEFORE the monthly turned green. In IBM's case we might be getting an even better entry however because the Monthly has turned green and now it's getting an intermediate/near term pullback. Take a look below on these 3 key time frames:




As always, we will update Members when/if that buy signal comes in via SMS mobile alert. For right now we are stalking this potential long position.


Some of the greatest pearls shared by Jesse Livermore:

“Money is made by sitting, not trading.”

“The desire for constant action irrespective of underlying conditions is responsible for many losses in Wall Street even among the professionals, who feel that they must take home some money everyday, as though they were working for regular wages.”

“Buy right, sit tight.”

“Nobody can catch all the fluctuations.”

“There is a time for all things, but I didn’t know it. And that is precisely what beats so many men in Wall Street who are very far from being in the main sucker class. There is the plain fool, who does the wrong thing at all times everywhere, but there is the Wall Street fool, who thinks he must trade all the time. Not many can always have adequate reasons for buying and selling stocks daily – or sufficient knowledge to make his play an intelligent play.”

“It takes time to make money.”

“Don’t give me timing, give me time.”