Shares Of Cisco Systems Failed To Hold Upgrade Gains

shares-of-cisco-systems-failed-to-hold-upgrade-gains

(Photo by Yichuan Cao/NurPhoto)

NurPhoto via Getty Images

Cisco Systems CSCO set its 52-week intraday high at $60.27 on August 25. The stock is up 28.6% year-to-date and is 4.5% below the high. Longer-term the network equipment company is 63.1% above its October 19, 2020 low of $35.28.

On Wednesday, September 15 the stock traded higher to $59.60 on a buy rating at Credit Suisse and a reiterated overweight rating at JPMorgan. Cisco made positive comments at its Investor Day presentation. JPM raised its price target to $70, up from $67. The stock rebounded to $59.60 then closed that day at $57.54.

The stock is above its 50-day simple moving average at $56.38 but is below its monthly risky level at $60. Back in March 2000, shares of Cisco traded as high as $82, which Credit Suisse cites as a possibility. My proprietary analytics indicates that the best-case scenario for the remainder of 2021 is its semiannual risky level at $63.09.

Cisco has a p/e ratio of 19.95% with a dividend yield of 2.56%, according to Macrotrends. The stock beat earnings estimated when it reported quarterly results on August 18. This gain helped the stock set its August 25 high of $60.27. Cisco has beaten earnings-per-share estimates in 16 consecutive quarters.

The Daily Chart for Cisco Systems

Daily Chart for Cisco Systems. Courtesy of Refinitiv Xenith.

Refinitiv

The daily chart for Cisco Systems shows that the stock confirmed a golden cross on January 15, 2021. This occurred when the 50-day simple moving average rose above the 20-day simple moving average. This stock closed that day at $45.43 as a buying opportunity. Since the golden cross, the stock has tracked the 50-day SMA higher with this average now at $56.38.

The stock’s semiannual risky level is above the chart at $63.09. The highest horizontal line is the monthly risky level at $60.00. The middle horizontal line is the annual pivot at $52.95 which was a magnet between March 29 and July 19.

Today’s neutral zone is between the 50-day SMA at $56.38 and its monthly pivot at $60.

The Weekly Chart for Cisco Systems

Weekly Chart for Cisco Systems. Courtesy of Refinitiv Xenith.

Refinitiv

The weekly chart for Cisco Systems will be downgraded to negative on a close this week below its five-week modified moving average at $57.06. The stock is well above its 200-week simple moving average or reversion to the mean at $46.81. The 12x3x3 weekly slow Stochastic reading is declining at 83.05 but is still above the overbought threshold of 80.00.  During the week of September 3 this reading was above 90.00, putting the stock into an inflating parabolic bubble formation.

Trading Strategy: Buy shares of Cisco Systems on weakness to its annual pivot at $52.95. Reduce holdings on strength to its monthly risky level at $60.

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