IBM stock has made an upside breakout from the recent downtrend from April until June this year, indicating that a reversal might be in the cards. Price has moved past the 200 and 50 simple moving averages, reflecting a return in buying momentum. At the same time, MACD is moving up from the oversold area, which means that IBM stock could see more gains.
In fact, the daily chart shows that IBM stock is making a bullish pennant pattern, indicating that the rallies could resume. A strong upside break above the $190/share mark could yield more wins for this stock until the $200/share area or previous highs.
IBM Stock Analysis
IBM is set to announce its earnings later on this week and it appears that stock traders are already pricing in positive news. After all, IBM recently invested $3 billion in chip research, amidst news that the company is looking to sell its chip manufacturing unit.
“We fundamentally believe that no other company can do this level of innovation for the chip,” Tom Rosamilia, senior vice president of IBM’s systems and technology division, said in an interview. “Our clients are driving us to continue to innovate to this high-performance world. It’s all about the breakthroughs that are on the horizon that we see need to be done.”
Some analysts expect to see soft results in the IBM earnings report, which might weigh on IBM stock and push it back in selloff mode below the simple moving averages or the broken shorter-term trend line.
“It’s more likely we are going to hear something about the … chip manufacturing operations after the earnings are released,” said Rob Lineback, senior market research analyst of IC Insights Inc., based in Scottsdale, Arizona.
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