The past month has proven to be a pivotal time for the S&P 500 Index (SPX), like “September seasonality”Resulted in monthly losses for the index, which also ended a seven-month winning streak – its longest since 2017. This volatility tends to carry over into October, and although many names are generally counter this trend, IBM (NYSE: IBM) has struggled in the past. The Dow member is on the October 25 worst-performing stock list by Schaeffer’s lead quantitative analyst Rocky White, so now it seems like a good time to dig into the technical setup of IBM stocks.
According to data from White, which features SPX stocks with the worst returns in October, IBM has recorded an average loss of 5.8% over the past 10 years and has only finished higher twice. This puts the title right at the top of the list, bolstering its position as the worst blue chip component, historically, this month.
At last check, IBM is down 0.5% to trade at $ 142.43, once again facing pressure from the 100-day moving average. It’s been a relatively banal year for security so far, as its June 10 rally to an annual high of $ 152.84 is still far from pre-pandemic levels. With now an advance of 12.4% in 2021, a loss comparable in October to those observed over the past 10 years would put IBM dangerously close to its breakeven point since the start of the year.
Options traders have been more bearish than usual over the past two months. This is the 50-day buy / sell volume ratio of stocks on the International Securities Exchange (ISE), Cboe Options Exchange (CBOE) and NASDAQ OMX PHLX (PHLX), which is in the 88th annual percentile of its annual range. This suggests that the long puts were recovered faster than usual.
For those looking to speculate on the next drop in the stock, a premium can be obtained for a good deal. This matches the Schaeffer Share Volatility Index (SVI) of 21%, which is above 26% of last year’s readings. In other words, the options market is currently incorporating low volatility expectations for stocks.