Shares of Cisco Systems (CSCO) have all fallen hostage to the trade wars whether they deserve it or not, reasoned Jim Cramer during his Mad Money program Thursday night.
In this daily bar chart of CSCO, below, we can see that prices made a topping pattern from April through July. Prices turned south in August and have struggled to find support around $46 the past few weeks. The moving averages are mixed with the 50-day moving average line in a declining mode or bearish slope, and the 200-day moving average line is still in an uptrend.
The daily On-Balance-Volume (OBV) line has been in a downtrend from June and reminds us that sellers of CSCO have been more aggressive. The Moving Average Convergence Divergence (MACD) oscillator in in a bearish configuration below the zero line.
In this weekly bar chart of CSCO, below, we can see that prices are below the still rising 40-week moving average line.
Trading volume looks like it has diminished a bit over the past three months but the OBV line has declined from April and looks like it has made a new low for the move down. A declining OBV line tells us that sellers are more aggressive.
The MACD oscillator is in a sell mode below the zero line.
In this Point and Figure chart of CSCO, below, we can see that the program is projecting a possible downside price target of $42 for CSCO. Not all that terrible but it would mean that the $46 support area was broken and that the $46-$49 area would become new chart resistance.
Bottom line strategy: The chart of CSCO needs a strong rally above $50 to improve and strengthen the chart. Until that happens it may be better to avoid the long side.
