Don't Ignore This Chart!

Big Blue Notches a 52-week High

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Even though its bell-weather status diminished over the years, IBM is still a big blue chip stock and remains a titan in the technology sector. Thus, a 52-week high in IBM bodes well for the market overall and the tech sector. The chart below shows IBM surging with the market from late June to early August and then correcting with a pullback into early November. I drew a falling channel to define this correction and decided on an internal trend line for the upper trend line. An internal trend line cuts through a spike low or high, such as the 29-Sept spike above 163 (blue oval). 


IBM exceeded the channel trend line with a surge on November 7th and then gapped up on November 10th. This gap looks like a breakaway gap that shows strong buying pressure. IBM moved above its August-September highs in early trading on Monday and recorded a 52-week high. Chartists may be concerned that the stock and the S&P 500 are short-term overbought after big runs the last three weeks. That may indeed be the case, but 52-week highs are long-term bullish and they are usually not isolated events. This means we should expect more 52-week highs in the coming months and put IBM on our watchlist for bullish setups (pullbacks). 

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--Arthur Hill CMT

Plan your Trade and Trade your Plan
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Announcement from the Author

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Arthur Hill
About the author: , CMT, is a Senior Technical Analyst at StockCharts.com. Focusing predominantly on US equities and ETFs, his systematic approach of identifying trend, finding signals within the trend, and setting key price levels has made him an esteemed market technician. Arthur has written articles for numerous financial publications including Barrons and Stocks & Commodities Magazine. In addition to his Chartered Market Technician (CMT) designation, he holds an MBA from the Cass Business School at City University in London. Learn More
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