Earnings Allow Cisco to Test Resistance

NASDAQ:CSCONew York, February 9th (TradersHuddle.com) – February has been a fabulous month for Cisco (NASDAQ: CSCO), as the company moved up more than 4 percent ahead of earnings.  The world’s largest networking equipment maker reported better than expected earnings and revenue, and their forward looking view was very optimistic.  EPS came in at $0.47 compared to the .43 per share earnings estimates predicted. Cisco generated revenue of $11.53 billion, which was better than expected. The average estimate for revenue of $11.23 billion. sales were 11% higher on a year over year basis.

Cisco stock’s price action has been positive and today’s bounce against support levels near the 20-day moving average bode well for CSCO bulls.  The stock has additional support levels near the 50-day moving average seen near 19.00.  The strong earnings numbers should continue to propel the stock despite dipping into the overbought region according to the relative strength index.  The RSI crossed above 70 for the first time since the highs made at the beginning of November. 

The grinding natural of the recent CSCO move has created a MACD reading that does not show increasing momentum.  In fact, momentum had grinded to a hault with the index line reading just above zero.  The spread (12-day moving average and 26-day moving average) is printing almost equal to its 9-day moving average.  The upward movement in the stock has been accompanied by solid volume as recent trading days volume is above the 50-day moving average of volume.

A close above 20.50, would likely lead to support levels near the weekly highs made during February of 2011 at 22.  A break of this region would likely target $24 and then $27.  On a weekly basis, the 50-week moving average has recently crossed above the 200-week moving average, which reflects the middle of a longer-term trend.

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