Large US companies heavily used as investment vehicles are good market indicators. They definitely belong to my “toolbox”.
IBM reported after market closed on 7-18-12. The company exceeded expectations. What happened the next day?
The shares opened about 3% higher. And then what? I think the sellers came at the major resistance zone of $197-$199.
Look at the hourly chart.
On the daily chart of IBM the price is getting squeezed between SMA(50) and the significant resistance $197-$199 with Friday action pushing it between SMA(200) and SMA(50).
IBM looks poised to close the gap from 7-19-12. The volume on 7-19-12 was very high and in my book it was a distribution day (selling on high volume into resistance).
Is IBM forming H&S on weekly chart? It looks quite possible. MACD needs to hold above zero line! The H&S will be negated by the move above $210 on high volume with close at the high on the day of the breakout.
Observe monthly close – just few more days!
IBM close at/below SMA(10) for the month may prove very negative for the overall market. In September 2008 IBM closed at/below SMA(10) on monthly – that coincided with IBM spending the whole September of 2008 hovering around SMA(200) on the daily chart!
Please keep in mind that above are just observations, not a sure thing!