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Intl Bus. Mach. - IBM - cls: 77.23 chg: +0.82 stop: 74.99

Company Description:
IBM is the world's largest information technology company, with 80 years of leadership in helping businesses innovate. Drawing on resources from across IBM and key IBM Business Partners, IBM offers a wide range of services, solutions and technologies that enable customers, large and small, to take full advantage of the new era of e-business. (source: company press release)

Why We Like It:
The market appears to be stuck in a new trading range. Yet even though the major averages aren't moving much the bias still appears to be bullish. If the DJIA and S&P 500 can breakout to new relative highs we believe they will drag shares of IBM with them. IBM has been consolidating under resistance at the $78.00 level for two months and appears to be coiling for a breakout. If IBM can breakout over the $78.00 level it will produce a new buy signal on its Point & Figure chart. We are suggesting that readers use a trigger over resistance at $78.00. Our suggested entry point will be $78.25. Once triggered the next obstacle will be round-number and bottom-of-the-gap resistance near $80.00. Our target is the top of the gap near $83.50. One of the biggest risks we see with this play is the time frame. We do not want to hold over IBM's earnings report and that only gives us about three weeks. 

Suggested Options:
While we plan to exit ahead of IBM's July earnings we still feel more comfortable suggesting the August calls.

BUY CALL AUG 75.00 IBM-HO OI= 345 current ask $3.70
BUY CALL AUG 80.00 IBM-HP OI=1491 current ask $1.10

Picked on June xx at $ xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 07/14/05 (unconfirmed)
Average Daily Volume = 7.4 million 

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