Despite the announcement of a $15 billion buyback plan on top of the $5.6 billion remaining in the current repurchase program on Tuesday, shares of International Business Machine (IBM) fell 1.08% on Wednesday.  IBM shares are down 2.72% for the month of October vs. the S&P 500’s (SPX) gain of 4.86%. Fundamentally, their revenue for FY13 is expected to decline 3.81% for 2013 to $101B from $105B in 2012. Looking ahead to 2015 estimates, revenue is only expected to grow $104B.

THE TECHNICAL TAKE ON IBM

IBM shares failed to rise above the one month down trending line on Wednesday, confirming a lower high at the $182.50 level. This short-term top also coincides with the Relative Strength Index (RSI) failing to move above the 50 reading. Look for a retest of the $172.50 support level in the next month and possibly even down to $170.00 before buyers step in again. Bearish positions at current levels offer a reward/risk ratio of better than 3 to 1.

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IBM OPTIONS TRADE IDEA

Buy: the Nov 22 weekly $180 put for $3.05 or better
Stop loss: $1.95
Upside target: $6.50-$7.50

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