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Guy Adami: For 18 Months, IBM Sell-Offs Have Brought Opportunity

Amid an after hours decline in IBM trader Guy Adami sees opportunity.

Despite a relatively good earnings report, investors punished Big Blue and that's raised eyebrows on the floor. However, Fast trader Guy Adami thinks “the stock had run too far too fast.” Simple as that.

Over the past month shares of IBM have climbed around 8% to new all-time highs, as investors bet that this disciplined company would dominate its competition. And on Monday, Big Blue seemed to deliver – at least relatively. They said corporate spending on information technology held up in the face of economic worries.

Also the company said signings in the quarter were $12.3 billion, in line with expectations.

”They’re gaining market share against Hewlett Packard and Oracle ,” muses Joe Terranova. “It’s a solid report and it shows global technology services remain strong.”

Nonetheless, trader Karen Finerman can’t shake off the weakness after the bell. She thinks it may be a sign that valuations have become too rich. ”Relative to rivals its expensive and relative to its own historical P/E it’s expensive,” she says.

However, Guy Adami reminds the desk, “If you look at a chart over the last 18 months, every sell-off post earnings within a few days has been an opportunity. My sense is that this will be too."

The question is when.

If you’re concerned about the S&P broadly, then they say stay away. If you think it’s full speed ahead, you might want to dip a toe.

And if you’re attempting to extrapolate results, the traders say this kind of a hiccup may not bode well for Microsoft and Oracle.

By the numbers, IBM revenue rose 8 percent from a year earlier to $26.2 billion, in line with the average forecast of $26.26 billion, according to Thomson Reuters I/B/E/S.

IBM reported third-quarter profit, excluding items, of $3.28 per share, up 15 percent year over year

Also the company said full-year diluted earnings would be at least $13.35 per share, up from its prior forecast of at least $13.25 in July.


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Trader disclosure: On Oct 17, 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Seymour is long AAPL; Seymour is long BAC; Seymour is long INTC; Adami Owns (AGU); Adami Owns (C); Adami Owns (GS); Adami Owns (INTC); Adami Owns (MSFT); Adami Owns (NUE); Adami Owns (BTU); Finerman owns AAPL; Finerman owns BAC; Finerman owns GOOG; Finerman owns JPM stock leaps & puts; Finerman owns GDX; Finerman owns MSFT; Finerman owns owns CMI short calls; Finerman’s firm owns AAPL short calls; Finerman’s firm owns MSFT; Finerman’s firm owns JPM; Finerman’s firm owns IBM short calls; Finerman’s firm owns CMI ; Terranova is long IBM; Terranova is long AAPL; Terranova is long EMC; Terranova is long LULU; Terranova is long CAT; Terranova is long AXP; Terranova is long F; Terranova is long TBT; Terranova is long OXY; Terranova is long FCX; Terranova is long MUB; Terranova is long LQD; Terranova is long VRTS

Fort Brian Kelly
Shelter Harbor Capital is long TLT
Shelter Harbor Capital is long NLY
Shelter Harbor Capital is long GLD
Shelter Harbor Capital is long LO
Shelter Harbor Capital is long Soybeans
Shelter Harbor Capital is long Corn
Shelter Harbor Capital is long Sugar
Shelter Harbor Capital is long SGG
Shelter Harbor Capital is short Euro Stoxx futures
Shelter Harbor Capital is short CRM
Shelter Harbor Capital is short IYR
Shelter Harbor Capital is short XRT
Shelter Harbor Capital is short Euro

For Scott Nations
Nations is long SPY

For Carter Worth
No Disclosures

For Todd Gordon
Gordon is long USD/CAD
Gordon owns UUP ETF

For Fred Cannon
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