IBM Head Fake Reversal?

Typically a head fake move the size of this would last several days to a couple of weeks, but IBM is definitely worth looking at here especially because you could have a stop about $1-$2 away. I wouldn't use that low amount of risk to establish a huge position, you still have to consider gaps and such, that's why I typically don't like any one position representing more than 10-15% of portfolio value, even if the stop is so small that it would allow for a much larger position without violating the 2% rule.

In any case, take a look at IBM which is one I've been keeping tabs on since last week.

 Remember what I've said about double tops and bottoms, the second move (top or bottom) in Technical Analysis is supposed to fall short of support (for a bottom) and resistance for a top, but over the last several years , more increasingly so, we see that violation which makes traders think the top or bottom is no good and they either short (the bottom) or buy the breakout top, these are the head fake moves that are so common. IBM just made such a move on something that looks like a double top. This is the daily chart with the breakout today.

 A daily chart of MoneyStream that is negatively divergent.

 Daily 3C chart also negatively divergent.

 Here's the kicker, IBM formed a very clear bullish bull flag which would lead technical traders to expect an upside breakout, it's these obvious patterns where you have to be most careful as they are often bull traps. You can see today's breakout above the last resistance area.

 However, like GOOG, going in to the breakout, the 60 min chart as well as the daily, were already negative casting suspicion on the breakout as a possible head fake move.

 On the breakout the 1 min chart is deeply leading negative.

 As is the 2 min

 The 5 min is negative

And the 15 min.

This is why IBM looks like it is a strong candidate for a head fake move in which you can short in to price strength with underlying weakness, the only thing is often these moves linger above resistance for days or weeks, even BIDU did. One way to deal with it is a partial or phased in entry, you can still keep the stop tight at $1-$2 above, although I'd prefer a little larger stop with fewer shares, but thus far today's intraday activity doesn't look that great. Another approach would be to short IBM as the head fake is confirmed with a price move below support at the $209.50 area.

This is definitely one to keep on the radar.