Traders Should Let IBM Find Where Investors Might Return

International Business Machines (IBM) was "checked out" almost a month ago where I wrote, "I would look for IBM to slip lower in the weeks ahead. A decline to $144 will weaken the chart and strength above $161 is needed to improve the picture, provided volume increases."

IBM has dipped below $150 in recent days and has closed below the flat 200-day moving average line. The 50-day moving average line has a bearish slope now so another look at Big Blue looks like a good idea on Tuesday.

In this daily bar chart of IBM, below, we can see a high in January and a lower high in March. There is a low in February but we have not yet made a lower low to establish a downtrend. The On-Balance-Volume (OBV) line has been flat since the middle of January even though prices have sold off and rallied. It seems that traders have decided to sit still.

In the lower panel is the trend-following Moving Average Convergence Divergence (MACD) oscillator which is below the zero line in a bearish configuration.

In this weekly bar chart of IBM, below, we can see that prices are below the slightly declining 40-week moving average line. The weekly OBV line has been going sideways for about eight months and not giving us signs of aggressive buying or accumulation. The weekly MACD oscillator is pointed down towards the zero line and could soon cross below the line for an outright sell signal.

In this Point and Figure chart of IBM, below, we can see a pattern of lower highs since March of 2017 (look for the "3" in 2017). A trade at $147.95 will be a short-term sell signal and a decline to $143.60 will be a more important signal.

Bottom line: Traders and investors should stand aside and let IBM find a level where buyers might return.

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