I still stand by the multiple-expansion thesis, and thanks to this sell-off, opportunity presents itself.
First lets establish the rising multiple thesis. The 2010 EU credit freeze threat pushed IBM to a trailing PE of around 11. The current credit freeze threat, which was far more severe than the 2010 threat, pushed IBM's trailing multiple to high 12 and mostly 13. During extreme market conditions, the trailing multiple has seen a higher low. Throughout 2011, normal market conditions allowed IBM to trade with a trailing multiple at 14, and pushing toward 15 at times.
With a credit freeze off the table, and IBM's 5yr plan still very much intact, a low end multiple of 14 is very reasonable. A trailing PE of 14 (using GAAP eps), would give a target price of 177-178.
Now, lets corroborated this with the technicals.
In the daily chart, there is support near the 20 SMA support and horizontal support near 175-177. Also the weekly chart shows solid SMA support near low-mid 170s.
IMO, the risk for IBM to decline, establishing a trailing PE below 14 is low. Hence I view it as a solid entry point, and would enter.
Here is how I would play IBM (bur right now can't): Since I would be completely out of IBM, I would enter an initial position tomorrow, near the 20 SMA if possible. If the negativity of the quarter is exaggerated by any market weakness, allowing it to break the trailing 14 PE, I would enter a second position at 175.
(I am familiar with the type of negativity IBM can encounter because I have been trading it for a long time, so I would also be prepared ride the above position to 172 and enter another position near 172. Any position entered near 172 I would unload toward 175-178.)