In his Real Money column "Panic Doesn't Pay, but These Bull Markets Will" Jim Cramer identified five bull markets that can work with spiking Covid-19 cases. The first is the 5G wireless bull market.
Cramer reiterated that he likes Qualcomm (QCOM) and Broadcom (AVGO) . Let's take a quick look at their charts.
Qualcomm
In the daily bar chart of QCOM, below, we can see that the shares have started a correction or pullback toward the rising 50-day moving average line. The On-Balance-Volume (OBV) line has rolled over but we can also see a potential zone or band of support in the $115-$110 area. Prices stalled in this area back in August and then buyers appeared in that area in September.
At this point I would look for buyers to show up again as $115 is approached, but nothing is for certain.
In this daily Point and Figure chart of QCOM, below, we can see a potential downside price target in the $111 area. A decline to $111 could mean that support might be broken so we do not want to rush to "buy the dip."
Broadcom
In the daily bar chart of AVGO, below, we can see that prices have broken below the rising 50-day moving average line. Priced could break the lows of September and then retest the highs of June and July -- the previous resistance zone. This area of resistance in the $330-$300 area could reversal roles and act as support.
The OBV line shows weakness this month and the MACD oscillator is close to crossing the zero line for a sell signal.
In this daily Point and Figure chart of AVGO, below, we can see a potential downside price target in the $309 area. Like the QCOM chart this target is near the lower end of potential support.
Bottom-Line Strategy
QCOM and AVGO are correcting, partly on their own and probably partly from the weakness in the broader market. These two stocks could show independent strength and not correct all that much OR traders and investors could become more aggressive sellers if there is an intense desire to raise money and get liquid. It is hard to say how this will all play out. Stay nimble.
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