IBM (NYSE: IBM) — “Big Blue” is the bluest of the blue-chip technology giants. Its global capabilities in information technology, software and computer hardware, and related financing make it a household name.
The Sept. 27 Trade of the Day identified IBM at $134 as a breakout candidate and recommended purchase with a target of $150 in three months. And, on Oct. 21, the Trade of the Day said, “Any pullback should be used to buy or add to positions in IBM.”
IBM struggled for most of last year before breaking from a head-and-shoulders bottom that now has a long-term target of $180 (not shown on the chart). And Standard and Poor’s rates the stock a “four-star buy” with a 12-month objective of $180.
But near-term spikes like that seen yesterday provide trading opportunities for those who may temporarily want to take the short side of the market with either put options or outright short sales. Today could provide the short seller with an opportunity to sell IBM at $163 or higher for a pullback to the open gap at around $152.
But long-term and intermediate-term holders of the stock should not disturb their positions except for put hedges or outright sales of call options that could boost long-term income.
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