Update [IBM]

Today IBM reported disappointing earnings (whatever the heck that means) and the stock plummeted 6.37% with a big gap down. If this were some other stock I would use a word other than "plummet" for a 6% drop.  But it is IBM and, dammit, nobody expects this kind of wild volatility to happen and nobody expects it to collapse like this. Nobody except people who watch charts that is.  I clearly called a top on IBM back on May 28 of this year.   I did not waffle on this view.  In fact I wrote some pretty bold things:

"I am calling for a massive collapse in the price of IBM shares.  I am doing this as the S+P 500 has been hitting new highs nearly every week.  The basis of my prediction has nothing to do with the so called fundamentals of the shares.  Fundamentals are, for the most part, nothing but sales materials for Wall St. stock peddlers.  So don't ask me what the PE, PS, PB, growth, etc. is because I specifically have avoided reviewing these things before making this post.

The reason for this seemingly reckless behavior is to prove a long standing point of mine: stocks have no real value.  Corporations exist primarily for the benefit of the employees, not shareholders.  In fact it only makes sense that those doing the work will be the ones rewarded for their effort.  The main reason I am now calling for a massive correction to begin within a year is my interpretation of the Elliott wave model as applied to the IBM chart."

I followed that up with some other posts including this one whose bottom line was that the breakdown had likely begun and that the chart was showing red for the first time in years.  While I expressed significant doubt in that post that this lower support line would hold, there are of course many ways this could play out.  But the shares better hold the line here or else the disaster will be upon not only IBM but the whole bloated market as well.  I would not ignore the possibility that the market will give the Christmas season a chance to prove itself before running away in a panic but there's no telling if the players will wait that long.  Regardless, Christmas season 2013 is going to be a major, major bust IMO.  The middle class is getting creamed on the jobs front and then Obama is crushing them with what are essentially new Obamacare taxes.  Obama's fooled young people into paying for the care of the elderly by telling the young people they were getting something for nothing.  And they believed the slick con man.  What a joke.

But back to IBM.  IFF IBM can hold support here then it is likely that a 4th wave just finished today and that the shares have one last bounce in them.  Given the way the economy is rolling over, I doubt the shares can bounce all the way to the top channel resistance again.  Best bet in this case is that they form some owl ears here with a declining double top that peters out mid channel as shown below.  And that's likely best case.  Failure to hold the lower parallel support line means bad things likely start happening not just to IBM but to the whole market sooner rather than later.

By the way, the obvious wave count would be that this is a fourth wave.  But it's almost too obvious at this point.  So anyone who buys this dip hoping for a spike back to 205 or 210 or higher should watch this sucker carefully.  Sometimes what looks like easy cheddar is just a mouse trap.  The lower support line is key, key key.