CSCO Cisco Systems Analysis March 2016 (W,M,Q)
Created on Sunday, 20 March 2016 09:14
Written by Austin Galt
Cisco Systems Inc (CSCO) is in the business of designing, manufacturing and selling internet protocol-based networking products and services related to the communications and information technology industry. It is listed on the NASDAQ with a market capitalisation of around $145billion. Price last traded at $28.33.
Let’s take a top down approach to the technicals beginning with the quarterly chart.
CSCO QUARTERLY CHART
We can see the shellacking price received after the 2000 high at $82. I have added Fibonacci retracement levels of the whole bull market and the 2002 low at $8.12 clipped the 88.6% level. That is a spanking indeed! Price rallied up and found resistance at the 61.8% level before coming back down to just above the 88.6% level where support came in and set up a higher low.
Since then price has been trending up gradually making higher highs and higher lows and in the process setting up what looks to be a massive base from which to explode higher from. This basing period has been going on for over 13 years now so the explosion should be a big one.
The Bollinger Bands show price generally being contained within the upper and middle bands with the recent low dipping just under the middle band. I doubt price will now trade below that low. Instead, I favour price to launch higher shortly as it clings to the upper band. Or better said, the upper band will cling to price as it rockets higher!
I have drawn a Fibonacci Fan from the 2000 high to 2002 low. This shows the 76.4% angle providing resistance at the 2007 high. Price eventually overcame that angle and is now zeroing in on the 88.6% angle. Once price is able to surpass this 88.6% angle it should be up, up and away.
Personally, I currently favour price to make all time highs in the years to come and that would likely set up a bearish divergence on the RSI.
The MACD indicator is currently trending up and marginally bullish.
CSCO MONTHLY CHART
I have added Fibonacci retracement levels of the move up from October 2002 low to the higher high set at $34.24 in November 2007. The first correction in a new bull trend is often deep and that was certainly the case here with price subsequently trading back down to $13.30 thereby clipping the 76.4% in the process.
The Fibonacci Fan shows the higher low at support from the 88.6% angle and price was then able to trade up above the 76.4% angle which now looks to be providing support. I am looking for one final move down to test the support from the 76.4% angle before price begins to trend up strongly.
The Bollinger Bands show price recently giving the support from the lower band a good workout and has now bounced back above the middle band. I suspect one last test of the lower band is still ahead of us. Let’s see.
The RSI has bounced back up bullishly into positive territory while the MACD indicator looks very close to a bullish crossover.
CSCO WEEKLY CHART
The RSI is looking strong although it has entered overbought territory while the MACD indicator is bullish but may need a break shortly.
The Bollinger Bands show price surging towards the upper band and once that has occurred I favour a move back down to at least the middle band.
The 100 period moving average (red) is above the 200 period moving average (black) signifying bullish conditions.
The Fibonacci Fan shows the recent low around support from the 88.6% angle and price now looks headed for the 50% angle. I favour a pullback shortly and the 76.4% angle looks like a good target to aim for the next low.
I have added Fibonacci retracement levels of the move down and I am looking for price to turn back down near the 88.6% level which stands at $29.42. Perhaps price then pulls all the way back to the 23.6% level which stands at $24.31. It is that low which I think will represent an excellent area to look at entering long positions.
Summing up, I am extremely bullish and once then next major higher low is in place I expect price to explode higher.
Disclosure – I have no financial interest in CSCO.