[IBM] update

Back in May 2013 I posted for the first time on IBM and the message was simple: it had reached a long term peak and I was negative on the shares to say the least.  At the time, the shares were trading at around $208.  At that time I wrote (mainly for the future benefit of those who don't understand how EW work like S.C.E. and others):

"So I repeat.  Right now, there is not one glimmer of bad news for IBM and their share price reflects that.  In fact, quite the contrary.  It was only a couple years ago that their computer, deep blue, beat the world chess champion.  And it was even more recent that their next generation AI computer, Watson, handily beat the best of the world's best human players at the question based knowledge game of Jeopardy.  Even more recently, IBM showed its prowess at manipulation of matter at the atomic level by releasing the fantastic YouTube, "A Boy And His Atom".  These advances are all fantastic in nature, true science fiction.

But despite all of that 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."

It was my clear intent to show that the social mood surrounding IBM at that time was very positive.  Again, not one glimmer of publicly visible bad news that I could see.   I followed that post up some months later with this one indicating that support was failing.  I followed up again with this post showing that the next potential support would be the line parallel with 1-3 but as you can see from the current chart today, that support line failed dramatically.

So now we have come to the next support level after 3 clear waves down from the peak.  That level is the blue line drawn parallel to the blue line connecting red 1-3.  You can see that the chart spiked down to that imaginary support line and then bounced like it had hit an electric rail.  $150 had good psych suport.

Because of this, anyone who is short IBM should be very careful and watch the chart for the next week or so because since bottoming the chart has now worked its way back up to the level of the prior 4th which was in fact a horizontal triangle.  We do not know at this point if the recent bottom was:

• red 4 or
• 3 of 1 down or
• just 1 of 3 down

The herd has set itself to go either of these three ways.  I will say that the big wave between red 3 and red 4 looks very "b" wave-ish.  So I cannot say whether the blue or red model will be taken from here but if this gets above 172 then we know that the motive wave down model is bust and the primary count becomes that it was a C wave, probably C of 4.

But even before $172 we should get a better read and in fact anything above $165 is starting to look bad in the near term for shorts.  Now keep this in perspective because "IBM the great" just saw a > 25% correction while the broader markets have continued to peak.  IF the broader markets begin to fail here, IBM could be the first thing that money managers sell and it could go into 3rd of 3rd freefall from here.

Bottom line is that it is crunch time for IBM shares; they are at a critical juncture which I think will begin to resolve itself definitively in the next 1-2 weeks.  But the really important take away is that it is all good and fine to have long term investing (gambling) themes but the smart way to play is to buy and sell based on the wave count and technical support levels because the true market value of stocks is zero.  They are just fake paper "assets" which people were suckered into buying by Wall St salesmen.  They have no more actual economic value than a poker chip issued by a Vegas casino.  Forget the marketing propaganda by Wall St.  After all, did they warn you in advance of the high possibility regarding this recent 30% collapse in the price of IBM shares?  No, they didn't.  And they never will.  Con men never give a sucker an even break.  If IBM goes below $150 in another wave down then I think it will be the next sign that Prechter's great crash will be upon us.  Either way, the next 1-2 weeks will be telling here.