IBM Shares Sink Despite Earnings – July 20, 2010

The shares of International Business Machines or IBM in the New York Stock Exchange failed to impress the market despite the 13% rise in the company’s second quarter income. IBM, which is the largest IT company in the world, boosted their EPS to $2.61. Its net income for the quarter jumped by 9% from last year to $3.4 billion. Its total revenue, however, fell short of the market’s $24.17 billion estimate with only $23.7 billion. This was perhaps the main reason why investors still sold of the stocks of IBM despite having a much better EPS.

In fact, the shares of IBM gapped down following the earnings report, losing by about 4%. As you can see from its chart, IBM has been consolidating within a triangle pattern for the last several weeks. Yesterday’s gap down, though, sent it below both the 50-day and 200-day moving average. Given this, it would need a lot more buying interest for it to rise again as it first need take out the mentioned moving average resistances. A couple of indicators also signifying some bearishness. The RSI has just fallen below 50, indicating that its downward momentum is gaining speed. The MACD is also about to make a bearish crossover with its histogram in the verge of turning negative. The only thing that is keeping it alive is the triangle’s support. A break of this support could send it down to 116.00 so watch out!

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