A Frigid Winter for Big Blue

Not much has changed for major Dow component IBM from a technical standpoint, as "Big Blue" is still battling a confirmed topping pattern on the monthly chart, projecting a move down to roughly $130, as I have written about before. After earnings, though, it is worth revisiting the chart just to drive home a point that there still seems to be many trapped "value" investors in the stock from much higher levels, who likely used Warren Buffett as a crutch in lieu of putting in their own rigorous analysis and independent thinking. Mr. Buffett is, of course, a legend and will go down as such. However, to piggyback him can lead to disastrous results--Note how he was wildly bullish on the rails in late-2007 just before an epic bear market. His time horizon is unique, and he can afford to do so. At any rate, you can plainly see the topping pattern playing out. I doubt we have seen capitulation yet, which means the path of least resistance (and support) is lower. The real issue for the market, at-large, is whether the Dow can continue to shake off such a major component effectively in a fresh downtrend.