Earlier today, about two hours before the closing bell, John Kosar appeared on the Talking Numbers segment of CNBC’s Street Signs to discuss Asbury Research’s forecast and outlook for Cisco Systems (CSCO), which reported its fiscal first quarter earnings after the close.

According to CNBC, Cisco Systems’ quarterly earnings and revenue topped Wall Street’s expectations as the company reported earnings ex items of 54 cents a share, compared to 53 cents a share in the year-earlier period, while revenue increased 1 percent to $12.25 billion from $12.09 billion a year ago.

Shares initially rose more than 2 percent in after-hours trade on the news and are now trading lower.

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The following are the charts and bullet points from John’s appearance


The first chart below plots CSCO weekly since 2007 and shows that:

  • the stock rose above both its November 2007 downtrend line (red) and 200-day moving average (blue) in March 2013, indicating a major bullish trend change.
  • the stock tested and held its 200-day MA at $20.48 per share in December 2013, conforming the validity of the trend.
  • CSCO has been moving sideways since August 2013, indicating temporary investor indecision.
CNBC Chart 1
CNBC: CSCO Chart 1

The next chart plots CSCO daily since 2011 and shows that:

  • the stock is in the midst of a bullish trend that began in August 2011
  • but has been drifting sideways since August 2013, indicating temporary investors indecision as investors digest the August 2011 advance.
CNBC Chart 2
CNBC: CSCO Chart 2

Approximately 80% of the time, these sideways indecision areas precede the resumption of the previous bullish trend.  A sustained rise above $25.90 per share would confirm that this is the case with CSCO and would target a 27% rise to $32.00.

The other 20% of the time, these indecision areas become near term tops.  A decline below $22.70 would be necessary to confirm that this is the case and would then target a move at least back to the 200-day MA at $20.48 per share.

Asbury Research is bullish on CSCO for a number of reasons including:

  • the better odds of a bullish breakout from the “indecision area” between $25.90 and $22.70 per share,
  • the major trend of the stock is positive or bullish, and
  • the NASDAQ 100, of which CSCO is a constituent stock, is currently making new 14 year highs.

Asbury Research subscribers can view our latest research by clicking here.

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