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IBM - Extra Big Gains 
Thursday, May 13, 2010
By Jay Pasch and Gibbons Burke
Offering guidance of nearly a doubling in annual earnings to $20.00 per share by 2015 sent the stock of International Business Machines (IBM3) higher by $5.79, an 'extra big' 4.6% on Wednesday to trade up to a new 13-week high, completely shaking off the market jitters that led to last week's robot rout. The share price closed the day on Wednesday at $132.68, and history suggests there may be more to come.
Q: How has IBM performed in the past when it has seen an 'extra large' one-day percentage gain?
A: According to the 45 previous occurrences of this event4, EventEdge indicates that IBM has shown a weak bullish edge that peaks 26 trading days after the event. Thus, the projected date for the peak of the bullish edge relative to the current event date (Wednesday, 12 May 2010) is Thursday, 17 June 2010. IBM rallies in 76% of the cases (34 of 45) by an average of 8.8% relative to the close on the event date. The average of the 11 declines is -5.3%. The overall return of the 45 cases is 5.3%, which, based on the close of IBM on the event date ($132.68), provides a target price of $139.71.
Using EventEdge®5 to narrow the scope of the query to occurrences of this event in the second quarter of the year, we see that the bullish edge improves significantly:
According to the 11 previous occurrences of this event in the second quarter, IBM has shown a strong bullish edge that peaks 36 trading days after the event. Thus, the projected date for the peak of the bullish edge relative to the current event date (Wednesday, 12 May 2010) is Thursday, 1 July 2010. IBM rallies in 91% of the cases (10 of 11) by an average of 9.2% relative to the close on the event date. The average of the 1 decline is -1.7%. The overall return of the 11 cases is 8.2%, which, based on the close of IBM on the event date (132.68), provides a target price of 143.56.
Mr. Jay Pasch6 is a private futures and equities trader based in Minnesota. He may hold positions in the instruments mentioned in his trading ideas.
Gibbons Burke7 is editor of MarketHistory.com.
 |
Let variable values:
@ = GII.IBM.NYSE
theEvent = IF
1 value percent_move of @ is more than
(30 day average of 1 value percent_move of @ +
(3 * 30 day std_dev of 1 value percent_move of @
)
)
THEN 1
ENDIF
Date Day t t+3 t+8 t+18 t+26
06/24/1969 Tue 3.2 1.8 6.9 -2.2 1.2
05/27/1970 Wed 7.0 10.8 2.8 3.7 -3.2
08/16/1971 Mon 6.4 -2.2 0.0 -2.8 -2.0
09/27/1972 Wed 2.2 -0.4 -1.7 -4.1 -3.9
07/12/1974 Fri 8.2 1.3 2.8 -0.1 -8.5
01/27/1975 Mon 12.3 0.0 7.2 19.3 17.8
07/15/1977 Fri 3.4 1.1 -1.0 -0.7 0.4
08/02/1978 Wed 5.0 -2.4 -1.5 0.7 3.9
12/19/1978 Tue 4.7 4.3 7.3 9.5 10.6
09/20/1979 Thu 5.2 -3.7 -4.2 -10.0 -12.6
11/26/1979 Mon 4.2 1.7 4.1 0.8 -1.7
01/08/1980 Tue 6.7 -0.6 3.3 3.0 3.0
03/27/1980 Thu 8.5 -4.6 -5.0 -7.0 -3.7
08/04/1981 Tue 3.1 -2.1 -0.4 -4.1 -6.0
10/06/1982 Wed 5.2 5.7 5.1 3.2 8.1
06/20/1984 Wed 5.2 -2.4 -2.1 0.0 0.8
08/03/1984 Fri 4.7 -1.4 1.5 3.3 1.5
12/18/1984 Tue 3.5 0.5 0.0 1.2 8.2
01/19/1987 Mon 4.4 1.7 2.7 5.9 13.2
05/31/1988 Tue 4.2 0.7 3.1 11.2 13.4
01/02/1990 Tue 4.1 1.8 -0.1 -1.1 5.2
04/16/1990 Mon 3.5 -1.6 -1.9 1.4 6.2
01/17/1991 Thu 6.1 1.9 7.6 14.7 15.4
04/08/1992 Wed 3.0 3.1 6.0 10.6 8.0
07/27/1993 Tue 7.7 -2.5 -4.9 -5.5 0.5
10/01/1993 Fri 4.5 0.3 -1.7 4.8 14.5
01/24/1994 Mon 6.1 -2.6 -4.9 -10.0 -9.6
04/21/1994 Thu 11.7 0.2 -1.1 4.1 7.9
07/21/1994 Thu 11.6 0.0 -0.2 3.6 12.2
10/07/1994 Fri 3.5 2.8 6.0 4.4 2.5
01/18/1996 Thu 9.8 7.0 12.9 18.1 29.7
07/16/1996 Tue 5.4 -2.1 8.5 17.4 17.2
11/15/1996 Fri 5.9 5.3 9.1 4.6 7.4
04/24/1997 Thu 7.9 3.1 7.7 13.1 13.4
10/21/1997 Tue 7.9 -6.8 -6.4 -3.5 4.3
04/21/1998 Tue 6.1 -0.5 -1.0 5.9 1.7
04/22/1999 Thu 13.2 9.0 9.0 22.6 19.3
10/11/2002 Fri 11.0 1.5 16.7 27.6 23.9
09/02/2003 Tue 4.6 1.4 3.4 3.8 8.0
01/15/2004 Thu 4.1 3.9 3.6 6.3 2.9
10/19/2004 Tue 4.0 -2.2 0.4 6.7 6.8
01/06/2006 Fri 3.0 -0.9 -2.2 -4.4 -4.5
04/24/2007 Tue 3.4 2.7 4.5 9.6 8.2
07/19/2007 Thu 4.3 0.3 -4.5 -3.3 -2.3
01/21/2009 Wed 11.5 0.2 -0.5 -0.8 0.7
05/12/2010 Wed 4.6 NaN NaN NaN NaN
Avg 6.0 0.8 2.2 4.0 5.3
AvgPos 6.0 2.9 5.9 8.3 8.8
AvgNeg NaN -2.3 -2.4 -4.0 -5.3
PctPos 100.0 57.8 53.3 64.4 75.6
PctNeg 0.0 37.8 42.2 33.3 24.4
Maximum 13.2 10.8 16.7 27.6 29.7
Minimum 2.2 -6.8 -6.4 -10.0 -12.6
StdDev 2.8 3.4 5.0 8.3 8.9
ZStat 2.1 0.2 0.4 0.5 0.6
Variance 8.1 11.4 25.5 68.8 78.6
46 Occurrences
Table 2 - Occurrences in the Second Quarter
Let variable values:
@ = GII.IBM.NYSE
theEvent = IF
1 value percent_move of @ is more than
(30 day average of 1 value percent_move of @ +
(3 * 30 day std_dev of 1 value percent_move of @
)
)
AND
Date is second quarter
THEN 1
ENDIF
Date Day t t+3 t+8 t+18 t+36
06/24/1969 Tue 3.2 1.8 6.9 -2.2 4.3
05/27/1970 Wed 7.0 10.8 2.8 3.7 0.2
06/20/1984 Wed 5.2 -2.4 -2.1 0.0 11.9
05/31/1988 Tue 4.2 0.7 3.1 11.2 8.2
04/16/1990 Mon 3.5 -1.6 -1.9 1.4 8.8
04/08/1992 Wed 3.0 3.1 6.0 10.6 6.8
04/21/1994 Thu 11.7 0.2 -1.1 4.1 11.3
04/24/1997 Thu 7.9 3.1 7.7 13.1 16.2
04/21/1998 Tue 6.1 -0.5 -1.0 5.9 -1.7
04/22/1999 Thu 13.2 9.0 9.0 22.6 18.8
04/24/2007 Tue 3.4 2.7 4.5 9.6 5.4
05/12/2010 Wed 4.6 NaN NaN NaN NaN
Avg 6.1 2.4 3.1 7.3 8.2
AvgPos 6.1 3.9 5.7 9.1 9.2
AvgNeg NaN -1.5 -1.5 -2.2 -1.7
PctPos 100.0 72.7 63.6 81.8 90.9
PctNeg 0.0 27.3 36.4 9.1 9.1
Maximum 13.2 10.8 9.0 22.6 18.8
Minimum 3.0 -2.4 -2.1 -2.2 -1.7
StdDev 3.4 4.1 4.1 7.1 6.2
ZStat 1.8 0.6 0.8 1.0 1.3
Variance 11.3 17.1 16.7 50.5 38.6
12 Occurrences |
Comments:
Web Address of this trading idea:
Links:
2 http://www.markethistory.com/content/analog/analog.html?ticker=IBM
3 http://quote.morningstar.com/stock/s.aspx?t=IBM
4 http://admin.markethistory.com/events/stocks/chart.html?ticker=IBM&events=UpXXL0
5 http://www.markethistory.com/content/events/stocks/chart.html?ticker=IBM&events=UpXXL0,quarter&date=2010-05-12
6 http://www.markethistory.com/staff/detail.html?s=pasch
7 http://www.markethistory.com/staff/detail.html?s=gibbons