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Chart in Focus: Technical Analysis of IBM

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Moving average convergence divergence

The difference between short-term and long-term moving averages is known as the moving average convergence divergence (or MACD). A negative figure reflects a downward trend, and a positive figure reflects an upward trend. International Business Machines (IBM) has recorded an MACD of about -4.5 in the last 14 days.

IBM’s peers Salesforce (CRM), Microsoft (MSFT), FireEye (FEYE), and Oracle (ORCL) reported MACD readings of ~1.2, 0.66, 0.73, and 0.18, respectively.

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Shareholder returns and stock trends

IBM (IBM) stock generated a return of ~3.7.% in the trailing-12-month period, compared to about -4.8% in the trailing-one-month period. However, it gained ~0.75% in the trailing-five-day period.

Bollinger Band

IBM stock closed at $152.03 on May 23, which is close to its Bollinger Band midrange of $155.00. This implies that the stock is neither oversold nor overbought.

A stock can be considered overbought if the price of a stock is close to the upper Bollinger Band, and some investors can take it as a “sell” signal. A stock can be considered oversold if the price of a stock is close to the lower Bollinger Band, and investors can take it as a “buy” signal.

IBM’s price multiples

International Business Machines (IBM) was trading at a forward EV-to-EBITDA[1. enterprise value to earnings before interest, tax, depreciation, and amortization] multiple of ~9.4x. In comparison, IBM’s peers Salesforce, Microsoft, FireEye, and Oracle had EV-to-EBITDA multiples of ~27.6x, ~12.9x, ~39.7x, and ~10.6x, respectively.

Enterprise value measures a company’s total value and can be used as a comprehensive alternative to equity market capitalization.

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