International Business Machines Corp. (IBM) Stock Does the Jingle Bell Rock

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Large-cap technology stocks have seen some better relative performance over the past week or so as sector and group rotation continues into year-end. Among this group of stocks, International Business Machines Corp. (NYSE:IBM) shares are flashing constructive absolute and relative price action. And from here, IBM stock looks promising for even higher prices.

beatthebellIn the month of December and into year-end, stocks have a tendency to rise. That holds particularly true for companies that have exhibited relative strength throughout the year. Large caps such as IBM stock fall into this category. And if history is any guidance, shares should see support in the final two to three weeks of 2016.

When I last discussed IBM stock on Nov. 14, I offered that the technical picture as well as the aforementioned sector rotation pointed toward a rally for Big Blue. So far, so good. IBM shares have slowly pushed higher and are on track to head higher still.

IBM Stock Charts

Before looking at the absolute charts, note that IBM stock in relative terms versus the Technology SPDR (ETF) (NYSEARCA:XLK) is exhibiting relative strength.

While no relative breakout has yet occurred, the coiling up below diagonal resistance does make a next move higher (in relative terms) more and more likely.

IBM vs XLK
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Looking at IBM stock through the multiyear weekly lens, we see that the January/February lows remain of pivotal importance as the stock retraced 61.8% (an important retracement number in Fibonacci analysis) of the entire rally off the 2008 lows into the 2013 highs.

ibmweekly
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Since then, the stock has worked systematically higher and now is attempting to break past diagonal resistance from the 2013 highs and back above the red 200 week simple moving average.

Through a six- to 12-month lens, this would be an important technical accomplishment.

On the daily chart, we see that IBM stock a few weeks ago pushed above a first layer of diagonal resistance, as marked by the black diagonal line. This also continued the stock’s string of higher lows and higher highs since the February lows and thus is keeping upside momentum alive.

IBM stock chart daily view
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From here, a next upside target comes into play around $173, which is the top of the down-gap from July 21, 2015. Above there, IBM stock could rise toward $180.

As usual, consider some sound risk management. Any strong bearish reversal on a weekly or daily closing basis would be cause to get out of long positions until a next bullish reversal rears its head.

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Article printed from InvestorPlace Media, https://investorplace.com/2016/12/international-business-machines-corp-ibm-stock/.

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