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IBM

Apr 8, 2021 14:38


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Thursday April 8

IBM Earnings Lotto Trade. Recent set new high for 2021 at $137.07 a few days ago on Monda. 2020 High is $135.88. 2020 High is $158.75 and ATH is $182.79. I think this stock may have been prematurely sold off during COVID panic as investors didn't believe there would be a lot of spending on hardware during this time. IBM 2020 annual EPS was $6.23, a 41% decline from 2019.

IBM is firing a D sqz and forming a wedge on the daily 8 EMA in a very strong uptrend. It is squeezing on the weekly too with rising bullish momentum in a low compression that can possibly fire soon. 3D has been firing for 4 bars which means that it could have another 1-4 to go (3 to 12 days).

Ran a Fibbonacci retracement from the highs in March and the bottom of COVID panic. The 78.6% level is a clear target (right at our strike) and we recently reclaimed the 61.8% retracement.

FinTech is a rapidly growing space and hardware stocks have been beaten down lately.

Huberty says that history shows that in a typical economic recovery, most hardware stocks outperform the market—and she notes that since IT spending bottomed in the 2020 second quarter, enterprise hardware has been the best performing tech group, beating the market by 46 percentage points. She thinks the trend will continue.

Among stocks with an Equal Weight rating, she lifts her target for Hewlett Packard Enterprise (HPE) to $17 from $15.50; for International Business Machines (IBM) to $150 from $140; and for Teradata (TDC), to $45 from $44.

Earnings are on April 19 - I think there will be bullish guidance over the call as IBM releases FinTech offerings through RedHat, the continual growth of IBM Watson, and the increase of hardware offering/spending with the recovery. IBM has been trending nicely lately and I think it could see a run-up. MM currently pricing in $9 move by April 23 which is $144 - so possible. Coupled this with a recent PT upgrade from $140 to $150 at Morgan Stanley which typically has very conservative price targets.

These were cheap so picked them up for 85 cents (25 quantity). Volume is heavy this week with 4.8K at $141 and 4.6K at $145. Sold 12 at $0.86 to lighten up the risk here. Only holding $13 at 0.85 or $1.1K of risk.

There was some call accumulation in Q1 too.


Execution detail:

Date/time Symbol Side Price Position
2021-04-08 14:38:50 23 APR 21 145 CALL buy $0.8500 long
2021-04-08 14:38:50 23 APR 21 145 CALL buy $0.8500 long
2021-04-08 14:38:50 23 APR 21 145 CALL buy $0.8500 long
2021-04-08 14:41:08 23 APR 21 145 CALL buy $0.8500 long
2021-04-08 15:00:08 23 APR 21 145 CALL sell $0.8600 long
2021-04-08 15:00:08 23 APR 21 145 CALL sell $0.8600 long
2021-04-12 09:40:58 23 APR 21 145 CALL sell $0.7700 long
2021-04-12 09:40:58 23 APR 21 145 CALL sell $0.7700 long
2021-04-12 09:40:58 23 APR 21 145 CALL sell $0.7700 long
2021-04-12 09:40:58 23 APR 21 145 CALL sell $0.7700 long
2021-04-12 09:40:58 23 APR 21 145 CALL sell $0.7700 long
2021-04-12 09:40:58 23 APR 21 145 CALL sell $0.7700 long
2021-04-12 09:40:58 23 APR 21 145 CALL sell $0.7700 0


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