IBM is due to release its earnings for the second quarter after the bell.
This will be a big event for the whole market.
The reason is that traders have baked-in a bad number. Since the last time IBM reported, in mid-April, the stock has been on a downward-trending roller-coaster, falling from about $207/share to its present price of $185.
The current average estimate from 22 analysts is $3.45/share. They're looking for $15.07 for the year, which yields a PE of under 13. What that tells me is that the "whisper number" may be below that estimate. (Officially that number is $3.49/share, but I suspect the "real" whisper number is lower, given the price action on the stock.)
If IBM delivers an upside surprise, you can not only expect a pop in the stock tomorrow, but in all the ETFs where IBM plays a part. Look especially for a pop in the Powershares Active MegaCap Fund (PMA), which has a very large IBM holding.
But given IBM's history and its place in the tech universe, expect a major run in all the averages if IBM springs an upside surprise.
On the other hand, don't worry too much about a short miss, and treat it as a buying opportunity, because that's already baked-into the stock. Analysts are expecting bad news because of Europe. IBM is a major player in that marketplace, and with Europe's current problems it's bound to show up.
But IBM is also a big player in markets that aren't as troubled, markets like China, India and Brazil, and if its sales efforts have been successful there, then you have hope. IBM has done a much better job monetizing the cloud than other companies, building private clouds for clients and consortia of clients in various geographies, and offering services through clouds to existing clients. IBM has been moving employment offshore, so its costs are less of a problem than you think, so even if the economy as a whole isn't doing well, that's no guarantee IBM won't.
You might want to play some IBM calls here, if you like the leverage. Or just pick up a few shares. Me, I'm letting my 100 ride.
Disclosure: I am long IBM.