IBM Stock Goes from “Worst” to “BEST!” Tech Performer in 7 Months… Can You Keep Up?
The time to plan for Big Blue's bullish future was back in October!
by Nico Isaac
Updated: June 03, 2021
For years, IBM's reputation has taken its fair share of hits. There's the one about IBM standing for International "Backbreaking" Machine, an allusion to the company's first portable computer that debuted in 1981 and weighed a whopping 44 pounds! And the others, about how in comparison to its youthful tech peers, IBM is a 110-year-old "dinosaur." (Oct. 15, 2020 Forbes)
But as this chart of IBM stock shows, between late 2020 and May 2021, the tech "fossil" came roaring back to life in a powerful rally to its highest level since February 2020.
The numbers don't lie. According to the May 14, 2021 Investor Place, IBM's 2021 gains have "outperformed stock of cloud czars Microsoft, Apple, and Amazon." In turn, in a blink of an eye, IBM has gone from butt of the joke to being taken seriously as a promising growth stock. Asks one May 27 Investor's Business Daily:
"Is IBM Stock a Buy Right Now?"
It's a bit whiplashy to think, but just a few months ago this same stock -- now considered a "rising star" -- was on the mainstream no-fly zone.
Back in September and October of 2020, Big Blue was feeling the blues Big Time! One September 18 MSN.com article listed these grim statistics as to why "IBM Remains America's Worst Big Tech Company"
- "Poorest performer among its peers"
- "6 Years of quarterly revenue decline"
- "Decade-long line of disappointing earnings"
- "Chance to return to the top tier of American tech companies receding with each reported quarter"
Then on October 20, the blows continued when IBM reported its lowest revenue in 23 years. That day, MarketWatch had this to takeaway:
"No one could have anticipated a pandemic, of course, but the return to revenue growth has long been an elusive goal for IBM.
"Most analysts issued a 'wait-and-see' approach for IBM, as more details about its path forward [emerge]."
Another October 20 CNBC said, given the uncertainty surrounding IBM's future, its chief financial officers were opting to provide "no outlook or guidance" for the company at this time.
So, at a time when the majority of mainstream outlets shined the spotlight on IBM's past weakness and/or its blank, unpredictable future, investors were left with little to go on.
However, in our October 29 Trader's Classroom video episode, editor Jeffrey Kennedy presented the following bullish chart of IBM, which showed the complete Elliott wave blueprint for Big Blue's road ahead. (Editor's note: Full Elliott wave labeling reserved for Trader's Classroom subscribers.)
Notice: Unlike the barrage of negative "market fundamentals" which earned IBM the title of "America's worst tech company," the Elliott wave pattern unfolding on this chart indicated the stock was about to make a serious comeback for the only reason that matters: a bullish turn in investor psychology.
In Trader's Classroom editor Jeffrey Kennedy's words:
"I like this interpretation because risk is clearly identified. I don't want to see prices fall below the low we saw earlier this year back in March. This is something to keep an eye on moving forward."
And, from there, IBM embarked on a 7-month rally to its highest level in over a year.
Next time you're reading the mainstream news on a certain stock and all the fundamental signs point it clearly in one direction -- remember this story about IBM and ask yourself: "Yes, but what are Elliott waves suggesting?"
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