IBM had a disastrous quarter in Q3 2014, where growth dramatically slowed. The market has punished IBM by selling it off hard. Following its drop from $190 to $160 IBM went into a long period of accumulation. The chart reminds me a classic Wyckoff pattern. As Richard Wyckoff explained in his seminal book on tap reading, large Wallstreet operators are not afraid to buy a fallen stock, provided the stock is large, liquid and has good earnings. In fact, they welcome an opportunity to accumulate shares at discount prices confident in their ability to mark up the stock once they have built a full position. While Wyckoff's work cover the classic period of 1920-30, I think its core is as relevant today as it once was. IBM fits the profile perfectly. It is an institutional stock that mutual fund managers are extremely comfortable with. Therefore, it is reasonable to assume that large operators are accumulating the stock. The chart, in general, seems to confirm. You can see a typical pattern of the stock being stuck in a ~ 8% range with a very strong support in $152 area. The support has been tested 3 times so far and held up. Finally, on April 23 IBM broke out of the range on increased volume. This is a sign that accumulation is over and the large operators are ready to mark up the stock. Accordingly, on May 6th I opened a 170/180 call bull spread in June expiration options at cost of $3.18. So far my spread was mostly in the green excluding today, when it sold off hard. I am watching it closely even though there is still more than 20 trading days left. If IBM does not make progress in the next week or so I will be looking to defend my spread. Likely, by converting to a butterfly with a 180 call kicker. That is provided IBM does not fall out of bed completely. source: IBM breakout post