A Look at IBM’s RSI and Volatility after Fiscal 4Q17


Feb. 6 2018, Updated 3:30 p.m. ET


Let’s look now at IBM’s (IBM) technical indicators. Fundamental analysis is a comprehensive analysis that starts with the overall economy and industry conditions and proceeds to the financial analysis of a company to arrive at the intrinsic value of its stock. Both technical and fundamental analyses are a part of equity analysis.

Let’s look into IBM’s RSI (relative strength index). RSI measures the intensity of investor sentiment. IBM’s (IBM) 14-day RSI is 72, indicating that the company’s stock is in overbought territory and can see some price correction. On a scale of 0 to 100, an RSI figure below 30 suggests that a stock has been oversold, while an RSI figure higher than 70 indicates that the company’s stock has been overbought.

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IBM’s volatility

IBM stock has a beta of ~1.1, which indicates that it is 7% more volatile than the overall market. Beta measures the relative volatility of a particular stock in comparison to the market. A lower volatility implies that a security’s value changes at a steady pace and does not fluctuate dramatically. On the other hand, a higher volatility indicates that stock prices can fluctuate significantly in shorter time duration. When the beta is more than 1.0, the stock is usually viewed as relatively more volatile than the overall market.

Investors seeking exposure to the tech sector could consider investing in the SPDR S&P 500 ETF (SPY) (SPX), which has 8.7% exposure to the application software space and invests ~0.7% of its holdings in IBM.


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