CNBC’s Jim Cramer and also also also legendary technician Larry Williams say shares of IBM, an old-line technology giant in which has transitioned its business to the cloud, could be ready to rally even after the company’s disappointing earnings report.
Last Tuesday, IBM missed analysts’ revenue predictions in its third-quarter earnings report, with overall revenue declining 2 percent year over year and also also also some of its faster-growing sections underperforming.
IBM’s stock shed as much as 5 percent in response to the report. today, shares of the company are near levels not seen since January 2016.
yet according to Williams, who has traded futures, commodities and also also also stocks for over 50 years, written 11 books, created numerous technical indicators and also also also runs IReallyTrade.com, IBM’s stock has some key technical trends working in its favor.
He and also also also Cramer, host of “Mad Money,” pointed to IBM’s weekly chart. The action from the stock of IBM is actually represented by the black line, while the red line combines two of the stock’s dominant past trends: a 325-day cycle and also also also a 145-day cycle.
“today, these cycles could’ve predicted the recent declines in IBM’s stock,” Cramer said. “More importantly, when you project them forward, they suggest the stock could be ready to roar higher here.”
Williams cross-referenced This kind of chart with one showing IBM’s typical seasonal pattern, represented below by the red line. In an average year, IBM’s stock tends to rally starting from the last week of October, the technician noticed.
and also also also while Cramer often jokes in which technical analysis can be a lot like astrology, where there’s no guarantee of reliability, he admitted in which some patterns — especially those Williams spots — can be counted on more than others.
“[Williams] found in which buying IBM on the 19th trading day of October … has produced 48 winning trades over the last 48 years, as long as you use a $9 stop, and also also also then you hold This kind of for 5 days and also also also sell once you get an up day after in which,” the “Mad Money” host said. “As things go, [in which’s] pretty darn not bad.”
Even if This kind of year breaks the streak, “at the very least, Williams has not bad reason to think in which IBM may be poised for at least a short-term bounce here,” Cramer added.
Williams backed up his theory even more by applying the Williams COTSI, an indicator in which helps identify whether big institutions are buying a given stock or not, to IBM’s daily chart. This kind of is actually represented by the blue line below.
“Right today, This kind of chart suggests in which the big boys are buying IBM hand over fist,” Cramer said. “Maybe they’re attracted to IBM as a value stock at these levels. This kind of’s got not bad yield, right? Maybe they believe the Fed will relent and also also also all things tech will be able to bounce. Maybe they think in which the tech rally [on Monday] is actually for real and also also also This kind of’s going to include IBM. No matter what, the one thing we know about institutional buying is actually in which This kind of tends to send stocks higher.”
So, in a market where many investors are feeling “dispirited” by the volatility and also also also aren’t as eager to do some buying, there are still opportunities, even in downtrodden stocks like IBM, Cramer said.
“Here’s the bottom line: This kind of market has gotten pretty ugly. I’m not denying in which,” the “Mad Money” host said. “yet sometimes, the charts can point you to opportunities from the most unlikely places. Right today, the charts, as interpreted by the legendary Larry Williams, suggest in which IBM’s worth buying here.”
Shares of IBM traded slightly higher in Monday’s trading session, settling up 0.71 percent at $130.02 a share.