Cisco Looks Vulnerable

 | Jun 19, 2017 | 3:36 PM EDT
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Action Alerts PLUS holding Cisco Systems (CSCO) has been holding in a very tight trading range in recent weeks. The technical indicators are mixed right now so it is going to be interesting to see which way prices break from this narrow range.

Let's examine the charts and indicators and see if a bullish or a bearish strategy is warranted.

In this daily bar chart of CSCO, above, we can see prices have been mostly confined to a $1 range since the mid-May downside gap. CSCO has been trading above and below the flattening 200-day moving average line. The slope of the 50-day moving average has been bearish since mid-May. The On-Balance-Volume (OBV) line peaked in February but started moving lower in early May. While the price action is sideways, the OBV line suggests CSCO may move lower. The Moving Average Convergence Divergence (MACD) oscillator crossed to the upside from below the zero line, generating a cover-shorts buy signal.

In this weekly chart of CSCO, above, the downside price gap disappears. Prices are testing the flattening 40-week moving average line. Prices show a small double top in the $34-$35 area with a declining weekly OBV line and a bearish MACD oscillator.

Bottom line: CSCO looks vulnerable to further declines. A close below $31 is likely to embolden the bears.

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