IBM Rebound Trade - Buying the Pullback at Key Confluence
Setup:
IBM is setting up for a potential high-conviction long entry around the $245 level, a price zone marked by multiple layers of technical confluence and volume-based support. Over the last 18 months, IBM has seen two notable pullbacks—both in the 17–20% range, often around earnings events. The current drawdown is consistent with this historical behavior and may represent an opportunity rather than a breakdown.
Technicals & Indicators
Volume Profile Support:
Using a volume profile anchored from January 2024, a clear volume shelf exists between $245 and $265.
A second profile anchored 10 months ago confirms heavy volume at $260 and $245, indicating high institutional activity and potential support zones.
200-Day Moving Average:
IBM has consistently respected its 200-day MA over the past two years. The MA is now converging at $245, adding dynamic trendline support.
Fibonacci Retracement:
Applying retracements from the April 2025 lows to the recent ~ $300 highs, the $245 level aligns with the 61.8% Fibonacci level, a key zone for potential reversals.
GAP Fill:
Looking for the recent earnings gap to close within the next 2 months, as we see new opportunities for tech companies and rising demand. This overreaction created a gap that should be filled as investors digest the macro strength and re-enter long positions in IBM. Gap close ~ $280 level.
Candles & Buying Pressure:
Recent daily volume after earnings suggests strong buying pressure with a hammer/doji candle forming on the day after earnings. Investors are already buying back into this name.
Fundamentals & Business Operations:
Despite the post-earnings dip, IBM continues to display strong business fundamentals:
Free Cash Flow (TTM): ~$12.3B, supporting dividends and future investment.
FCF Margin: 19.1%
Gross Margin: ~58% | Operating Margin: ~ 17%
Forward P/E: ~22.45x | EV/EBITDA: ~19.85x
Dividend Yield: 2.6%
These metrics reflect operational efficiency, cash generation, and relative undervaluation compared to peers—especially given IBM’s AI and hybrid cloud positioning that remains strong. With margins that continue to be at the top of the industry, IBM also has the resources to execute on the tremendous opportunities arising in the tech world.
Macro & Industry Context:
We’re in the early stages of a long-term AI and data center growth cycle, and IBM, while not the most popular AI name, is deeply embedded in enterprise infrastructure, consulting, and mainframe compute. Their recent earnings beat didn’t change that narrative. Investor sentiment overreacted, giving patient traders a potential entry on weakness. Analysts still hold a buy on this name with price targets well above $270. This isn't a one-day trade, but in a few weeks, let's see where the market is at.
Price Targets & Risk/Reward:
Entry Zone: $245 (watch for confirmation & strength)
Target 1: $280 (resistance level with high volume in the range)
Optional Long-Term Hold: If the broader AI trend continues, IBM could break all-time highs and trend above $300 over time.
Strategy & Patience:
This is not a chase setup. I will wait for $245 to be reached and confirmed—a level backed by technical support, volume profile, and long-term valuation logic. If IBM holds and reverses with strength, this could be a strong swing trade or even a long-term position for investors who want value with AI exposure. I will be looking for a confirmation(maybe a candle pattern) before entering the trade, but if it gets there, I see good potential for a bounce.
IBM is setting up for a potential high-conviction long entry around the $245 level, a price zone marked by multiple layers of technical confluence and volume-based support. Over the last 18 months, IBM has seen two notable pullbacks—both in the 17–20% range, often around earnings events. The current drawdown is consistent with this historical behavior and may represent an opportunity rather than a breakdown.
Technicals & Indicators
Volume Profile Support:
Using a volume profile anchored from January 2024, a clear volume shelf exists between $245 and $265.
A second profile anchored 10 months ago confirms heavy volume at $260 and $245, indicating high institutional activity and potential support zones.
200-Day Moving Average:
IBM has consistently respected its 200-day MA over the past two years. The MA is now converging at $245, adding dynamic trendline support.
Fibonacci Retracement:
Applying retracements from the April 2025 lows to the recent ~ $300 highs, the $245 level aligns with the 61.8% Fibonacci level, a key zone for potential reversals.
GAP Fill:
Looking for the recent earnings gap to close within the next 2 months, as we see new opportunities for tech companies and rising demand. This overreaction created a gap that should be filled as investors digest the macro strength and re-enter long positions in IBM. Gap close ~ $280 level.
Candles & Buying Pressure:
Recent daily volume after earnings suggests strong buying pressure with a hammer/doji candle forming on the day after earnings. Investors are already buying back into this name.
Fundamentals & Business Operations:
Despite the post-earnings dip, IBM continues to display strong business fundamentals:
Free Cash Flow (TTM): ~$12.3B, supporting dividends and future investment.
FCF Margin: 19.1%
Gross Margin: ~58% | Operating Margin: ~ 17%
Forward P/E: ~22.45x | EV/EBITDA: ~19.85x
Dividend Yield: 2.6%
These metrics reflect operational efficiency, cash generation, and relative undervaluation compared to peers—especially given IBM’s AI and hybrid cloud positioning that remains strong. With margins that continue to be at the top of the industry, IBM also has the resources to execute on the tremendous opportunities arising in the tech world.
Macro & Industry Context:
We’re in the early stages of a long-term AI and data center growth cycle, and IBM, while not the most popular AI name, is deeply embedded in enterprise infrastructure, consulting, and mainframe compute. Their recent earnings beat didn’t change that narrative. Investor sentiment overreacted, giving patient traders a potential entry on weakness. Analysts still hold a buy on this name with price targets well above $270. This isn't a one-day trade, but in a few weeks, let's see where the market is at.
Price Targets & Risk/Reward:
Entry Zone: $245 (watch for confirmation & strength)
Target 1: $280 (resistance level with high volume in the range)
Optional Long-Term Hold: If the broader AI trend continues, IBM could break all-time highs and trend above $300 over time.
Strategy & Patience:
This is not a chase setup. I will wait for $245 to be reached and confirmed—a level backed by technical support, volume profile, and long-term valuation logic. If IBM holds and reverses with strength, this could be a strong swing trade or even a long-term position for investors who want value with AI exposure. I will be looking for a confirmation(maybe a candle pattern) before entering the trade, but if it gets there, I see good potential for a bounce.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.