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TECHNICAL ANALYSIS


Bellwether Tech?

01/29/02 01:03:34 PM
by Austin Passamonte

IBM stock has amassed some sizeable gains since late September 2001. What's in store for "Big Blue"?

Security:   IBM
Position:   N/A

During the last bear market rally from late September to early December, few big cap stocks performed more strongly than IBM. Market pundits are now saying it is THE standard of measure in technology. If indeed that's the case, it would behoove those who focus on trading technology to see where the market is going.

Better than that, as a component of the Dow and heavyweight in the S&P 100 and 500 indexes Big Blue is a market-moving model for sure!

Figure 1: Weekly Chart: IBM
Graphic provided by: Quote.com.
Graphic provided by: QCharts.
 
IBM's now "coming in" for those bulls who lament missing the first ride up. I personally would not touch it on the long side until those weekly chart signals reach oversold extremes and turn bullish from there. Where might that be? My guess is the $100 range in a few weeks (or less). Stochastic values will eventually reach oversold extreme on a weekly chart basis and turn bullish reversals from there, probably to signal the next strong upside move ahead.


Figure 2: Daily Chart: IBM

Daily chart stochastic values have reached an oversold extreme, but we might expect them to remain pinned near there until weekly chart readings join them in unison. Right now the $109 area seems logical for an attempted bounce straight ahead.

So Goes The Market?
We all heard numerous media bulls pounding the table for IBM at $150 and beyond. While that price target may indeed be met to the upside eventually, technical indications suggest it will happen on a rebound from sub-$110 and possibly deeper still.

Knowing what a few key bellwethers are doing is important for filtering trend direction and striving to stay on the proper side!



Austin Passamonte

Austin is a private trader who trades emini stock index futures intraday. He currently trades various futures markets from home in addition to managing a trader's educational forum

Title: Individual Trader
Company: CoiledMarkets.com
Address: PO Box 633
Naples, NY 14512
Website: coiledmarkets.com/blog
E-mail address: austinp44@yahoo.com

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