Public trading strategy
IBM crashes 25% on worst earnings miss in decades — contrarian bounce play
Thesis
A 20%+ single-day drop on an earnings miss is historically extreme for a large-cap company like IBM. While the fundamental thesis of clients shifting to hardware is concerning, a sell-off of this magnitude often exhausts selling pressure in the short term as forced sellers finish liquidating. Bargain hunters frequently step in after the initial panic, making a bounce or stabilization likely in the days following the crash.
Strategy approach
Build a mean-reversion strategy on IBM using daily bars. Entry: go long if the stock drops more than 15% in a single session and the daily RSI(14) closes below 30. Exit: close the position after 10 trading days or if the price falls an additional 7% from the entry close (stop loss).
Markets and timeframes
IBMD1