IBM Shaping Up as a Short
On IBM's (IBM) chart, we've seen a break in an uptrend line that's been in place for nearly two years. That has the stock poised for a potentially serious pullback. The weekly chart shows the stock moving out of a narrow channel consolidation in September 2010 as the 50-day moving average crossed above the 200-day line. At that point, the stock began a steady climb higher, reverting to the long-term average only briefly a year after the breakout, then entering a second rally phase toward the April 2012 high.IBM (IBM) -- Weekly Source: StockCharts.com View Chart » View in New Window »
The April-to-May pullback took IBM back below the 50-day moving average and saw the shares retest the uptrend line. The bounce in early June was unable to retake the 50-day line, and the price has now breached both the 200-day line and the long-term uptrend line. There were negative technical indications that accompanied the top: The relative-strength indicator moved below its 21-period signal average, and moving-average convergence/divergence made a bearish crossover. Overall volume had been declining during the second-half rally phase and, more recently, Chaikin money flow moved below its 21-period average, and is now nearing its centerline....207 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.
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