A rare but very bearish
Island Top has formed in IBM
shares today. Earlier in the week, the shares gapped up through $65 higher, traded at new highs for two days in the $168-$172 range then gapped back down under $165 today. This combination of an exhaustion gap upward and a breakaway gap downward indicates a major top has formed for the shares. It also means that anyone who bought Wednesday or Thursday is now offside and underwater, a potential source of selling pressure. Initial downside support could appear near $161.68 or $158.75, 38% and 50% retracements of the recent uptrend.