charts courtesy of www.stockcharts.com
IBM has fallen out of favor lately by the self-proclaimed tech experts. However, one should not discount the rich history of this important tech stock. The major stock indexes have been skewed to include the darlings of the tech industry that never seem to fall out of favor with investors (e.g. Apple, Google, etc.). But for a true picture of what is going on with the large caps it can be important to see how IBM has been performing. The above two charts illustrate this point.
The Dow 30 stocks ($INDU) have put together a good rally as of late. One can argue they are being held up by the above mentioned "darling" stocks which control a significant percentage of the stock indexes and how they are calculated. The IBM chart shows a clear breakdown and continuation of its downward trend even with good earnings expectations. "Big Blue" IBM historically has been an accurate bellweather for the direction of the market. Therefore, it might be prudent to pay attention to the IBM chart for a glimpse of where things might go from here.
The Fed is still talking about raising interest rates.. now in December. At this point they are grasping for reasons to raise interest rates when the rest of the world is talking about easing. Some speculate that IBM is pricing in the negative effect that higher rates will have on the US dollar and multinational corporations. But for now the so-called experts want to keep talking about how great Apple, and Google, and the rest are. They used to talk about Dell computer that way too... Just sayin.
Disclaimer: The above is for information purposes only. Any decision to buy, sell, or hold any specific investment for your portfolio should be reviewed by your investment adviser.
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