IBM's nightmare earnings shock — short the rip or ride the collapse
Thesis
IBM's surprise profit miss and 20%+ collapse represents a fundamental shift in its business, not just a normal bad day. Management explicitly blamed a shift in client spending away from their software and infrastructure segments, which means this revenue bleed could last for several quarters. A collapse of this magnitude shakes out confident long-term holders and invites heavy institutional selling to limit risk. With the broader market already fragile from chip stock weakness and geopolitical tensions, IBM is likely to face relentless pressure as traders abandon the stock.
Strategy approach
Build a short-bias momentum strategy on IBM using a D1 timeframe. Enter a short position when the stock closes below its prior day's low after a gap-down earnings event. Exit the position if the stock closes above the high of the earnings day, or hold for a maximum of 15 trading days.