Earnings Play: Cisco Systems
Jason Lubin November 11, 2020 4:30 PM
Will Cisco continue to fall inside of the bearish pattern or breakout to the upside?
On Thursday, after market, Cisco Systems (CSCO) is anticipated to release first quarter EPS of $0.71 compared to $0.84 a year ago on revenue of approximately $11.9 billion vs. $13.2 billion last year. The company is a leading global supplier of network hardware and software, and its expected move based on front-month options is 5.6%. The last time the company reported earnings the stock dropped 11.2%.
Looking at a daily chart, in logarithmic scale, Cisco's stock price has been falling inside of a descending broadening wedge pattern that began to form in mid-August after the company last reported earnings. The RSI is currently sitting at roughly 54 and appears to be pointing down. The simple moving averages (SMA) are set-up in a bearish manner, with the 200-day SMA above the 50-SMA and the 50-day SMA above the 20-day SMA. Price will likely hold below the upper trendline of the pattern and sell off towards the 35.25 support level. If price reaches 35.25 it will probably find brief support. If price falls below 35.25, then it will likely decline further to 32.50. On the other hand, if price can breakout and close above the upper trendline it would be a bullish signal that could send price up to the first resistance level of 40.50. If price can breakout to the upside of 40.50. then it could reach for 42.75.
Source: GAIN Capital, TradingView
StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.
No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.