January 22, 2021

Dissecting IBM Earnings & What It Means For Your Portfolio

Midas Letter
Midas Letter
Dissecting IBM Earnings & What It Means For Your Portfolio

Disappointing earnings from technology leaders are to blame for the drop in the Dow Jones Industrial Average (INDEXDJX: .DJI) today. Leading the disappointments is the missed revenue expectations from International Business Machines Corp.’s, aka IBM (NYSE: IBM).

IBM’s stock price fell around 6.5% aftermarket. Their sales have now declined or remained stagnant for ten quarters with no year-over-year increase in revenue. Their biggest unit (cloud and cognitive software) saw revenue decrease 4.5% from the year earlier. Unfortunately for IBM, this is becoming a familiar pattern and is reflected in their stock price.

It is still too early into earnings season to make broader characterizations across the market. But, keep an eye on the stock charts to see how traders react to the news, rather than taking headlines at face value.

Fundamental and technical data are pointing to a much-needed correction. Not a full-fledged bear market but a healthy pullback that will allow stocks to move forward with the correct momentum. Some key data points to keep in mind in this regard: the divergence between the S&P 500 (INDEXSP: .INX) and the RSI oscillator, the percentage of stocks trading above their 200-day moving average, and the put-to-call ratio.

Watch the full interview to see how we analyze current market conditions and what we suggest to trade/invest in.


Midas Letter is provided as a source of information only, and is in no way to be construed as investment advice. James West, the author and publisher of the Midas Letter, is not authorized to provide investor advice, and provides this information only to readers who are interested in knowing what he is investing in and how he reaches such decisions.

Investing in emerging public companies involves a high degree of risk and investors in such companies could lose all their money. Always consult a duly accredited investment professional in your jurisdiction prior to making any investment decision.

Midas Letter occasionally accepts fees for advertising and sponsorship from public companies featured on this site. James West and/or Midas Letter may also receive compensation from companies affiliated with companies featured on this site. James West and/or Midas Letter also invests in companies on this site and so readers should view all information on this site as biased.