Cisco Systems, Inc. (CSCO) is looking very interesting as a trading opportunity right now. The technical setup offers the best window into what traders can expect whether they are bullish on the play or bearish. We’re therefore exploring these deeper technical numbers with a view to helping traders make better decisions on the current trading prospects of CSCO. Before we get into the numbers let’s take a look at the importance of these numbers that help to make up the technical chart. Few traders realize just how important the technical chart is for trading success. Those that do manage to thrive in most trading environments, which is why we go to great lengths to articulate the importance of such charts.
CSCO’s position, when dissected using the very handy technical charting tool we’ve championed above, now looks very interesting. This position is opened up first by the stock’s current day’s high $31.64 and the accompanying day’s low $31.22. As things stand, the current day’s high means the stock is positioned negatively when matched against the prevailing 52-week high of $34.60 set by CSCO on 06/27/16. Given the range, and in particular the position of the stock’s low, we can make the assessment that the day’s low represents a 16.40% since 05/08/17. As a trader you can take this to mean something positive as it relates to CSCO latent upside potential and the opportunities, or not, that it provides for active traders. It’s not just traders who are taking a keen look at the stock, either. In the weeks and days of data amassed for the stock, a more open display of analysts. From their perspective, the stock has presented a compelling picture via data. This data has created a $35.43 for CSCO. As it stands, this target price is below the biggest gains set by the stock in recent times. Other important data is starting to inform the way analysts and traders see the stock. CSCO beta is currently 1.24. Traders that use the beta metric in their trading assessments of stocks know that the current beta for CSCO is greater than 1, and as such, gives clear directional bearing for upside. The current beta, as assessed below or above 1, suggests that CSCO is theoretically more volatile than the composite sector to which it belongs. At this stage you should start to see what is developing for the stock. Let’s move more inland; these metrics only scratch the edges
So far we’ve looked at those data points that help point the way directionally for the stock. Now it’s time to get inside the heart of what the data is truly saying. Two of the most important technical indicators used by savvy traders are the Relative strength indicator (RSI) and Stochastic – both offer a deeper glimpse into the soul of the stock as it were. The present reading for CSCO 14-day RSI is 41.38%. What does this mean in real terms? A RSI reading at that level suggests that CSCO is neutral, suggesting that the stock is relatively stable and may possibly stay in situ, moving neither up or down in any meaningful or dramatic way. The stochastic reading is a sort of tag team partner for RSI. Usually they speak the same language in terms of telegraphing upside. For CSCO, the stochastic reading of 45.47% suggests that the stock is neither overbought nor oversold at prevailing levels. CSCO and its upside, of course, can be judged by tacking on even more salient technical data points. We are thinking here about the always-used statistical moving averages – namely the 50 and 200 SMAs. CSCO, on the strength of its moving averages, appears to present a sentiment worthy of being called bullish. And as go the sentiment around the SMAs, so goes the upside potential of the stock. In this case the sentiments appear to be positive.
So far we’ve put together, what we feel, is a pretty compelling image of the trading g prospects for the stock. But what if we could do more? Stick around because in the next section we’ll do just that. CSCO’s -2.24 has now created a much more confident set of data upon which traders can rely. This reliance is so pronounced that we can make a judgment that overall sentiment is now negative. This is hardly surprising for CSCO because further analysis reveals that the stock has actually underperformed the S&P 500 by -7.47. As a result of this performance the stock is now offering higher volatility levels when juxtaposed with similar stocks in its native sector. Based on the overall readings, historical volatility has placed CSCO in the front row for many traders. Again, this is hardly a shocker given that historical volatility for CSCO is 27.89%. CSCO is no slouch on the measure of the Average True Range, either. ATR, as you know, simply cannot be ignored in assessing a stock and CSCO offers a very clear reading with an ATR reading of 1.58. CSCO is as revealing it can be and those fine technical indicators used to illustrate its upside should never be taken for granted. Use them well.