IBM turns weak as Australian authorities slap $30M fine

November 29, 2016
IBM turns weak as Australian authorities slap $30M fine August 9, 2018 Clive Nelson

IBMFollowing the impressive third-quarter results that beat the analysts estimates, last week, the stock of International Business Machines (NYSE: IBM) hit a 12-month high of $164.50 on Monday. Considering the impressive Q3 results, a trader should purchase the stock on dips. However, the recent issues faced by the company, as discussed underneath, indicates that the stock would undergo a short-term correction.

Last week, IBM agreed to pay $30 million penalty to the Australian Bureau of Statistics (ABS) for the failure to prevent the four DDoS (Distributed Denial of Service) attacks that resulted in a failure of the predominantly online household census. To prevent data theft, ABS shut down the website.

The attacks, which seem to have originated from Singapore, have not only tarnished the reputation of IBM but also decreased the possibility of receiving similar contracts in the future. This was evident from the statement of the Australian Prime Minister Malcolm Turnbull, who was vocal against the consideration shown by ABS to IBM during the tender process.

Fortune Magazine

In another setback, the senior content strategist of IBM, Elizabeth Wood, has resigned from IBM, citing the support offered by the company’s CEO Ginni Rometty (shown above) to the US President elect Donald Trump. Both Rometty and Wood had published an open letter, which is a cause of concern to the investors. It can be remembered that during the election campaign Trump had criticized IBM for outsourcing of jobs to foreign countries.

Following the Q3 results, the analysts had forecasted a price of $156.94 over a 12-month period. The price has now crossed the analysts’ target. Thus, it is imperative that a huge chunk of investors would certainly resort to book at least partial profits in the counter. Thus, it would certainly bring the share price down in the nearby future. At the end of third-quarter, a majority of analysts had given a buy recommendation. The latest survey indicates that 61% of the analysts have turned their rating from ‘buy’ to ‘hold’. So, based on the discussion, we can anticipate a price correction in the stock.

The price chart reveals the existence of resistance at 164.60. Minor support is seen at 163. The MACD indicator has started to descend towards the zero reading. More importantly, the main line of the MACD indicator has crossed below the signal line, thereby underlining the bearishness in the scrip.

IBM Stock Price: November 29th 2016

IBM Stock Price: November 29th 2016

So, a trader should look at the possibility of investing in a one touch put option (referred to as low or below option by some binary brokers) contract which expires next week. The trader should enter the ‘low’ or ‘below’ trade when the price trades above 164. Looking for the best Australian binary option brokers? Why not check our expertly reviewed brokers to find which are offering the best bonuses and offers.

About the Author

Clive Nelson

Clive Nelson Author

Hi, my name is Clive Nelson and welcome to Traders Bible. Just to tell you bit about myself…I have been trading FX and binary options for the best part of 10 years now. After graduating with honours in economics, I began working for an investment bank in New York as an assistant trader before working my way up. After a few years, I went on to work as a broker in London, England and then eventually came back to the U.S to work in a hedge fund, where I manage $800 million of my clients’ investments. There have been times over the course of my career where I’ve had to take a hit, but I’ve accepted that losing is part of the game, it’s a learning curve. I’ve learnt from my mistakes and you don’t have to make the same errors I did. A lot of my education came from when I was a broker and this is why I’m here to tell you that Traders’ Bible offers you the foundations of how to become a great trader.

Related Articles

FICO Credit Scoring Will Impact Credit Scores Of Millions In US

Credit scores play a major role in the financial life of every individual. In the past, credit scores were based

Invesco Blockchain ETF Launched On London Stock Exchange

Blockchain exchange-traded funds (ETFs) are a hot commodity right now and investors will be interested in the latest ETF that

Aussie signals downtrend on decline in consumer prices

The AUD/USD rally, which began in the last week of December 2016, took the pair to a high of 0.7608