Monday’s IBM earnings release will be watched closely for signs of potential weakness following the incessant rise in the dollar. This has led to a rise in the cost of the company’s goods internationally to add on top of a raft of recent woes which have plagued the blue-chip.
Accusations of internal turmoil and underinvestment were just one of the reasons for the deterioration in IBM’s share price. It has seen 24% written off its value since the March 2013 high of $215.89.
Attempts to gain market share within the ‘internet of things’ phenomenon have been greeted with skepticism and with a simultaneous move into cloud technology, the feeling is that these initiatives may even be dilutive for IBM’s margins.
From a technical standpoint, the resistance zone between $166.32 and $164.82 has held up on numerous occasions since the initial move lower in October 2014. With the recent recovery in price, we are likely to see a retest of this level, setting us up for a potentially crucial crossroads. A big beat in earnings may be the spark that this share needs to break above $166.32. Should such a move transpire, bulls would be looking for a potential return towards $172.10 levels as a long-term resistance target.
However, given the long-term trend, I wouldn’t be surprised to see a move back towards the downside upon engaging the resistance zone between $166.32 and $164.82. Should that occur, I would be looking towards a return to $160.00 in the near future.