Conclusion, Investment Implications, Strategy

Cisco Systems, Inc. (CSCO) appears to be resuming its November 2020 major uptrend amid quarterly relative performance versus the benchmark S&P 500 (SPX).  A sustained rise above the $44.23 area would help confirm to this and target an additional 13% rise to $52.00 per share.  This is an Asbury Momentum trade idea.

Analysis and Rationale

Cisco Systems, Inc. (CSCO) designs, manufactures, and sells Internet Protocol based networking and other products related to the communications and information technology industry in the Americas, Europe, the Middle East, Africa, the Asia Pacific, Japan, and China. It provides infrastructure platforms, including networking technologies of switching, routing, wireless, and data center products that are designed to work together to deliver networking capabilities, and transport and/or store data. The company also offers collaboration products comprising unified communications, Cisco TelePresence, and conferencing, as well as the Internet of Things and analytics software. In addition, it provides security products, such as network security, cloud and email security, identity and access management, advanced threat protection, and unified threat management products; and cloud and system management products.  Cisco Systems, Inc. was founded in 1984 and is headquartered in San Jose, California.

The upper panel of Chart 1 below plots CSCO daily since July 2020 along with its 200- and 50-day moving averages, widely-watched major and minor trend proxies.  The lower panel displays a corresponding daily relative performance chart of CSCO versus the benchmark S&P 500 (SPX, blue) along with its 63-day moving average (green, quarterly, our Strategic time period).

The colored highlights in the upper panel show that CSCO appears to be resuming its late November major uptrend, as defined by its 200-day MA, while its 50-day MA is crossing from below to indicate a positive Strategic shift in price momentum.  Meanwhile, the current trend of quarterly relative outperformance versus SPX as shown in the lower panel also appears to be resuming.  A sustained rise above the 200-day MA, currently at $43.10, would help to confirm this and target an additional 13% rise to $52.00 per share. 

Chart 1

Table 1 below shows that considering the aforementioned upside target and a protective stop placed below the $44.23 area, a long entry price of $46.19 would provide a 1:3.0 risk/reward ratio (risking $1.00 to make $3.00) with an initial risk of 4.2%.

Table 1

Click Here for a table containing all of our current stock, ETF and index ideas.

Please consult the table showing our Asbury 6 key market metrics to help determine if this investment is suitable for you.