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IBM (NYSE-IBM) Elliott Wave Forecast and Analysis - 160108

Title Image IBM (NYSE-IBM) Elliott Wave Forecast and Analysis - 160108

🧭 The Long View: Positioning IBM in the Grand Scheme

One of my colleague asked for an analysis, and starting with the big picture provides excellent context. Looking back to the 1993 all-time low, you've identified a massive, multi-decade bullish structure.

📜 The Historical Wave Count

  1. Red Wave I (Impulse): This major move, which topped out around 139, established the primary long-term uptrend. This wave was the initial surge that effectively pulled the stock out of its post-early-90s turbulence, signaling a massive transformation for the company.
  2. Red Wave II (Correction): The corrective phase that followed, ending near 69.50, was a deep, significant pullback. This move, a classic deep correction, successfully reset investor sentiment. The depth of this correction is a crucial factor, as a powerful second wave typically lays the foundation for an equally powerful third wave.
  3. Red Wave III (The Great Impulsive Rally): This is where we are now. The rally that began after the 69.50 low is the start of the next large-scale impulsive move. Wave III is typically the longest and most powerful wave in the entire sequence.
  4. Blue Sub-Wave 2 (The Current Correction): The multi-year correction you identified, which has been in place since March 1st, 2013, is, according to your view, the Blue Sub-Wave 2 of the larger Red Wave III. This means the entire decade of sideways and downward drift is just a corrective pause before the main, powerful advance of Red Wave III begins.

If this wave count holds, the upside potential is enormous, as the impending Blue Sub-Wave 3 (the next leg up) should mirror the explosive growth characteristic of a major third wave.

📉 The Current Crossroads: The $130 Anchor

The immediate technical action is where things get truly interesting. We’re at the culmination of this prolonged correction, and the price is currently resting on a highly significant level.

⚓ Strong Support and Psychological Barriers

You correctly noted that the price is near 130, a level that previously acted as a strong resistance and is now expected to provide strong support. This is textbook technical analysis—when a key resistance level is broken, it often flips roles and becomes a durable floor. It also acts as a major psychological level—a big, round number that many traders and algorithms focus on.

The setup is a classic "make or break" scenario:

  1. The Bullish Scenario: If this level holds, the market will effectively have placed a long-term bottom here, validating the end of the long Blue Sub-Wave 2 correction. This would signal that the stock is finally ready to embark on its impulsive ascent as Blue Sub-Wave 3 begins. Holding this level confirms that buyers are stepping in decisively at a structurally important price.
  2. The Bearish Contingency: If the market fails and the price breaks convincingly below the 130 psychological level, we must acknowledge that the correction might be deeper or more complex than a simple ABC. Your next identified support level near 125 is highly relevant. This price point represents a potential 61.8% Fibonacci retracement of the most recent significant advance (likely the prior Blue Sub-Wave 1). Losing 130 would make a test of this deeper 125 Fib level highly probable, requiring us to re-evaluate the exact internal structure of the correction.

📰 The Macro Factor: Non-Farm Payrolls (NFP)

Finally, you hit on the critical macro variable of the day: Non-Farm Payroll (NFP).

While NFP is a broad economic indicator primarily impacting interest rate expectations and the overall market sentiment (S&P 500, Dow Jones, etc.), its influence on an individual stock like IBM cannot be ignored.

Why NFP Matters to IBM Today

  1. Rate Expectations: A much stronger-than-expected NFP report can push up interest rate expectations, which is often seen as a headwind for growth and tech stocks due to higher borrowing costs and a higher discount rate on future earnings. This could provide the necessary selling pressure to break the 130 support.
  2. Risk Sentiment: Conversely, a surprisingly weak NFP report could increase speculation that the Federal Reserve will pause or pivot on its monetary policy sooner. This is typically bullish for the broader stock market, especially for tech companies like IBM, and could provide the buying impetus needed to defend the 130 level and confirm the long-term bottom.
  3. The Decisive Catalyst: The NFP release is a major volatility catalyst. Today, it acts as the external event most likely to provide the sudden burst of volume and momentum required to definitively confirm which of the two technical scenarios (holding 130 or falling to 125) will prevail.

If we summarize above paragraphs, the technical setup suggests we are at the end of a massive corrective structure, poised for a significant bullish move. The price action at the $130 former resistance turned support is the ultimate structural test, and today's NFP report will likely provide the volatility and direction needed to determine whether this long-term bottom is cemented or if we get a final, deeper dip toward the $125 Fibonacci support before the multi-year rally truly kicks off. We're watching the price action around 130 very closely.

Trading Wisdom of the Day

“The best traders don’t chase the market; they understand its rhythm.”

Crucial Risk Management Advice

Crucial Advice: Effective trading is based on disciplined risk management, not prediction certainty. Always use a firm stop-loss to protect your capital. Macroeconomic news, particularly from the Federal Reserve or the European Central Bank, can override any technical pattern instantly.

Profile Image of Ghulam Muhiuddin, Certified Technical Market Analyst, 18 Years of consistent market analysis and forecasting</strong>

About the Author

Experience: This analysis reflects the insights gained from 18 Years of consistent market analysis and forecasting, specializing in the application of the Elliott Wave Principle and advanced technical structures.