Big Blue-IBM Trade Idea (short)

I have some signals showing large caps moving out of rotation, I'll look closer at large, mid and small caps, I suspect midcaps may be moving out as well.

Take  look at IBM, this may not be everyone's cup of tea, but the size of IBM can give you large cap coverage and there' certainly a lot better liquidity if you are looking for an options play.

 IBM is a great example of not only the volatility bounce, but a head fake play. In the white area it is obvious that there was a resistance/support area around $206, the gap down and subsequent break of $206 kept IBM right below resistance, this is where shorts would have seen multiple failures of the test of resistance. Yesterday's move up to fill in most of the gap was a very strong move for IBM considering it Beta, shorts are knocked out, maybe some longs jumped in and IBM took them all out yesterday and today.


 We do have today's gap, the market has been pretty reliable about filling gaps, that is where the ideal trade would be, but looking t the bigger picture, IBM is still in good shorting position even here.

 MoneyStream on a daily chart is severely leading negative.

 The 15 min 3C chart of IBM telegraphs all of the moves very well from strong distribution to accumulation for yesterday's bounce, right now it is in line, not leading negative, not positive, but in line, which could afford IBM some upside breathing room. It appears very obvious to me that smart money used yesterday to sell/short IBM when looking at the depth of the negative divergence.

 Here's where IBM may offer a bounce in to the gap, which would be a better place to phase in to shorts, the downside momentum seems to be falling off as some intraday 3C support on the short term charts comes in to play.

 Again, look at the depth of that negative divergence on yesterday's strength, smart money is apparently moving out. We also see a positive divergence developing in IBM on an intraday basis.


The daily Trend Channel has held IBM's trend very well, it would suggest a stop some where around $206.50, that would also seem to be an ideal area to look at phasing in to some short in IBM.