IBM has had a stealthy rally in the last month, up 10% in almost a straight line since mid December, a classic “Dog of the Dow” move. The one year chart below actually looks quite encouraging, making what some technicians might call a double bottom (circled green):
While the double bottom clearly drew in buyers, the stock’s brief engagement with it’s 200 day moving average (yellow line) might have drawn out sellers as the company is set to report Q4 earnings next week on Tuesday after the close.
The options market is implying about a 4% one day move which is shy of the 4 qtr avg move of about 5.2% and the qtr avg move of about 4.7%. Whats fascinating though, when looking back to IBM’s one day move going back to January 2011, is that the stock has taken turns trading opposite to what it has done the prior quarter going back 3 years. For instance if the stock traded down the prior quarter it has gone up the next, following results. See the screenshot below from Bloomberg, looking at the column all the way on the right under %PX Chg. That is the price change following each quarterly earnings announcement:
We’ll take a close look in the name before earnings but wanted to highlight that strange pattern.