Cisco Reports Earnings Between Technical Levels

Cisco Systems, Inc. (CSCO) has been a component of the Dow Jones Industrial Average since June 8, 2009. This tech giant makes internet protocol networking products for the communications and IT industries. Before becoming a Dow stock, Cisco set its all-time high of $82.00 back in March 2000. The stock then traded as low as $8.12 in October 2002. With the stock below $10.00, I recommended it on TV on the show called "Forbes on Fox."

Cisco stock closed Tuesday, Nov. 13, at $45.12, up 17.8% year to date and in bull market territory at 20.8% above its 2018 low of $37.35 set on Feb. 6. The stock is 8.8% below its 2018 high of $49.47 set on Oct. 3. By comparison, the Dow 30 closed Tuesday at 25,286.49, up 2.3% year to date and down 6.2% from its Oct. 3 high of 26,951.81, and the average is 8.3% above its April 2 low of 23,334.52.

Analysts expect Cisco to post earnings per share of 72 cents to 74 cents when the company reports results after the close on Wednesday, Nov. 14. A positive earnings report on Aug. 15 provided the momentum until the 2018 high of $49.47 was set on Oct. 3. Tariffs and weak local overseas currencies could squeeze third quarter earnings.

The daily chart for Cisco

Cisco began 2018 above a "golden cross" since Oct. 16, 2017, when the stock closed at $33.54. A "golden cross" occurs when the 50-day simple moving average rises above the 200-day simple moving average and indicates that higher prices lie ahead. The horizontal lines are my semiannual value level of $41.15, my monthly pivot at $44.80 and my quarterly risky level at $46.16.

The weekly chart for Cisco

The weekly chart for Cisco is negative, with the stock below its five-week modified moving average of $45.95. The stock is well above its 200-week simple moving average, or "reversion to the mean," at $33.21. The 12 x 3 x 3 weekly slow stochastic reading is projected to end this week at 49.72, down from 51.89 on Nov. 9. 

Given these charts and analysis, my trading strategy is to buy Cisco shares on weakness to my semiannual value level of $41.15 and reduce holdings on strength to my quarterly risky level of $46.16. My annual value level lags at $29.88, and my monthly pivot is $44.80.

Disclosure: The author has no positions in any stocks mentioned and no plans to initiate any positions within the next 72 hours.