Back on June 21 we reviewed the charts of Qualcomm (QCOM) and I wrote that "I find enough chart clues to suggest that shares of QCOM could trade sideways from here but not enough clues to recommend purchase just yet." Three weeks later and a sell side firm upgraded the stock to a "Buy" on Friday and the charts are looking stronger.
Let's review the charts again.
In this daily bar chart of QCOM, below, we can see that prices made a bounce higher in late June and then a quick retest in early July. QCOM has subsequently rallied to move above the declining 50-day moving average line. The downward trending 200-day moving average line is not far above the market and intersects around $153.
The daily On-Balance-Volume (OBV) line now shows a rising trend as traders of QCOM have become aggressive buyers. The Moving Average Convergence Divergence (MACD) oscillator has strengthened since late June and is now crossing the zero line for an outright buy signal.
In this weekly Japanese candlestick chart of QCOM, below, we can see a very large bullish engulfing pattern at the end of June and beginning of July. This bottom reversal pattern has bullish confirmation with a white real body last week.
The weekly OBV line looks like it is starting to turn higher and the MACD oscillator is crossing upwards for a cover shorts buy signal.
In this daily Point and Figure chart of QCOM, below, we can see a potential price target in the $168 area.
In this second Point and Figure chart of QCOM, below, we see a potential higher target in the $193 area.
Bottom line strategy: QCOM may dip back to around the $140 area before further gains. Traders could use this anticipated pullback to probe the long side of QCOM. Risk to $130. The $168 area is our initial price objective but traders should be ready to pivot if the broad market averages falter.
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