Cisco Systems (CSCO) is scheduled to report their latest quarterly numbers after the close of trading Wednesday. Let's review the charts and indicators for any clues to the direction of prices.
In the daily bar chart of CSCO, below, I see a mixed picture. The shares have recently pulled back to break the 50-day moving average line and also the 200-day line. CSCO has traded around the 200-day line the past two to three weeks and I am not sure the rally will get restarted.
The trading volume is on the light side. The daily On-Balance-Volume (OBV) line declined in April and has only made a slight recovery so far in May. The Moving Average Convergence Divergence (MACD) oscillator is below the zero line in sell territory but it looks like a cover shorts buy signal is happening.
In the weekly Japanese candlestick chart of CSCO, below, I see a mixed picture. The shares are trading just below the 40-week moving average line.
The weekly OBV line shows weakness in April. The recent candles show a doji or a small spinning top pattern which suggest a balance between bulls and bears. The MACD oscillator has been correcting and is very close to crossing below the zero line.
In this daily Point and Figure chart of CSCO, below, I can see a potential downside price target in the $40 area. A trade at $52 or higher will start to turn this chart positive.
In this weekly Point and Figure chart of CSCO, below, I can see the same $40 price target as the daily chart above.
Bottom-line strategy: I have no special knowledge of what CSCO will tell shareholders this evening but the charts and indicators do not give me a clear message. I would keep your powder dry and not take a position in CSCO ahead of earnings.
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