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International Business Machines - (IBM) - April 29, 2024

SIA Charts’ Relative Strength rankings not only help investors to identify which stocks in a universe are outperforming and underperforming against their peers, but also when relative performance trends are changing.

Technology giant International Business Machines (IBM) had been showing signs of peaking over the last month, when selling pressure intensified following last Thursday’s earnings report and guidance. In the last two trading days, the shares have dropped 22 positions in the SIA S&P 100 Index Report from 12th spot to 34th place, falling out of the green zone for the first time since October.

While IBM was in the green zone, it returned 17.5%, compared with a gain of 22.6% for the SIA S&P 100 Index, a sign that much of the gain in the index was powered by a small number of stocks. In the last month, IBM is down 11.3%, while the index is down 1.8%.

A major breakdown is underway in International Business Machines (IBM) shares. In early March, the shares faltered short of the $200.00 round number and spent the last six weeks under distribution, establishing a new downward trend of lower highs and taking out their 50-day moving average.

Last week’s selloff was particularly devastating for IBM shares. Not only did they take out $180.00 support to complete a bearish Descending Triangle, but they also completed a larger than usual Island Top. The big gap down on volume below $180.00, mirrored a big gap up on volume back in January. This breakdown has left anyone who bought and held between $180.00 and $200.00 in the last three months offside.

Measured moves suggest potential downside support could emerge near $160.00 and $140.00, with the $150.00 round number in between. Initial upside resistance appears near $172.50, the bottom of the most recent gap, followed by the $180.00 breakdown point.

International Business Machines (IBM) staged a big advance between October and March, but that now appears to be over. Last month, the shares peaked just short of $200.00 and since then, they have been steadily sliding. The shares completed a bearish Double Bottom pattern which has extended into a bearish Low Pole.

The shares are approaching initial potential support near $165.00, which is based on a horizontal count, followed by $157.00, the halfway point of a previous high pole, the $150.00 round number, and a previous breakout point near $146.45. Initial resistance on a bounce appears near $175.15.

With its SMAX score (which is a near-term 1 to 90-day indicator comparing an asset against different equal-weight asset classes) falling to a bearish 5 out of 10, IBM is exhibiting short-term weakness against the asset classes.

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