I'm Listening to Subscribers and Checking Out Qualcomm

Here's our trading strategy after another look at the chipmaker's charts.

Shares of chipmaker Qualcomm (QCOM) have been trading sharply higher since early October. A Real Money subscriber emailed me Monday for an update on the charts and indicators.

We last looked at QCOM on Nov. 4 where we wrote that, "Traders who are still long QCOM from June or earlier should continue to hold. Raise stops to $135. Traders who are flat could buy QCOM at $154 and also risk to $135. Our price targets are $227 and $259." 

QCOM has not reached our first price target but I learned on my first job out of university that you should always listen to your clients -- they pay the bills. 

Let's review the charts of QCOM again. 

In the updated daily bar chart of QCOM, below, we can see that the shares made a small consolidation in early November before rallying higher. Another consolidation can be seen from the middle of November until now. This sort of "backing and filling" gives traders and investors an opportunity to adjust their positions and add to longs on intraday dips. QCOM has seen heavier than "normal" trading volume the past two months.

The On-Balance-Volume (OBV) line moved up strongly into late November and then showed a correction lower. The Moving Average Convergence Divergence (MACD) oscillator is also correcting lower. 

 

In the weekly Japanese candlestick chart of QCOM, below, we can see a mixed picture. Prices are in a longer-term uptrend with bullish technical studies but we also see some upper shadows in recent weeks. The upper shadows on the candles tell us that some traders are rejecting the highs. The slope of the 40-week moving average line is positive.

 

The weekly OBV line made a new high for the move up and is more bullish than the daily OBV line. The weekly MACD oscillator is bullish. 

 

 

In this daily Point and Figure chart of QCOM, below, we can see a potential price target in the $223 area. 

 

 

 

 

In this weekly Point and Figure chart of QCOM, below, we can see a longer-term price target of $319. 

 

 

Bottom-line strategy: Traders who are long QCOM should raise stops to $172 from $135. The $223 area is our new price target but you should also expect some hesitation at the round number of $200.

 

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