Cisco Systems (CSCO) is expected to report their latest quarterly earnings after the close of trading Wednesday. Let's check and see how traders may be positioned.
In this daily bar chart of CSCO, below, we can see that prices have skidded lower from late December to last week. Prices have bounced mildly but remain below the declining 50-day moving average line. The 200-day moving average line has a negative slope and this lagging indicator will take a long time to reverse.
The On-Balance-Volume (OBV) line has been weak since late December but shows some very recent stability. The Moving Average Convergence Divergence (MACD) oscillator has crossed to the upside for a cover shorts buy signal.
In this weekly Japanese candlestick chart of CSCO, below, we found a couple subtle clues. Prices are still in a downtrend and trade below the bearish 40-week moving average line. The trading volume has been steady the past few months and the weekly OBV line has been steady the past four months with some recent improvement. The MACD oscillator is below the zero line but it has begun to narrow recently.
In this daily Point and Figure chart of CSCO, below, we can see a potential downside price target in the $40 area.
In this weekly Point and Figure chart of CSCO, below, we can see the same $40 price target.
Bottom line strategy: I have no special knowledge of what CSCO is going to report to shareholders tonight, but the charts suggest we could see a tradable rally in the days and weeks ahead. This anticipated rally could fizzle and disappoint because the Point and Figure charts are bearish. Though I anticipate a bounce and would not go so far as to recommend purchases for a trade.
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