Six consecutive selling days have put shares of IBM (IBM) at their most oversold levels of the year.
What is especially interesting about the relentless sell-off in IBM is the fact that the stock was rallying to near 52-week highs just a week ago. In fact, IBM has sold-off every single session since that test of the stock�s highest levels in a year.
The first few days of selling off those highs was clearly profit-taking, the smart money and disciplined traders who headed for the exits before the credits were finished.
At current levels, with the stock making new short term closing lows for the past three days in a row, there is a chance that the selling has become overdone � at least in the short term. Six day sell-offs in IBM have been rare this year (there was a five-day sell-off in early February and a pair of five-day corrections in late May). Both of those multi-day retreats were met by swift, short term buying, with IBM bouncing higher for at least two days in each instance.
The selling in a stock after it has rallied to or near 52-week highs can be sharp and dramatic. Once traders and investors begin to sense that their peers have begun to start selling, the urge to lock in gains can be almost overwhelming. And when the broader market is also experiencing heavy selling, it doesn�t take much for a stampede of traders to decide almost at once to flood the market with stock, depressing prices and only encouraging other weak hands to abandon their shares.
Down well over 1% on Wednesday and off by more than 4% over the past week, shares of IBM will take a positive edge of more than 1% into trading on Friday.
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