IBM Nails Earnings, But May Be Overbought In The Near Term

Summary:

• IBM IBM soared 10 percent higher on Wednesday after posting earnings that beat Wall Street expectations.
• The stock’s market cycles point to a bit more upside and then a pullback, as its declining phase approaches.

IBM Stock Weekly Chart

The company reported earnings per share of $4.87 and total revenue of $21.76 billion, above analyst estimates of $4.84 and $21.75 billion. Management forecast its fiscal year revenue at $13.90, which was also above expectations.

With cloud revenue up 12 percent, CEO Ginni Rometty explained that. “We returned to full-year revenue growth, reflecting growing demand for our services and leadership solutions in hybrid cloud, AI, analytics and security,"

With regard to IBM’s market cycles, we can see that it is in the rising phase of its current minor cycle, with the declining phase of the intermediate cycle in sight. We previously saw IBM as in a negative pattern, but it is now repairing itself. Nearing resistance, we expect the stock to pull back from around $136, with a better buying opportunity coming in late March or April.  

Related Links:

Market Seems Generally Pleased With Earnings Results, But Geopolitics Still Weigh

Analysts Debate IBM: One-Time Fluke Or Sustainable Recovery?