Upside Is Limited for the Nasdaq

Qualcomm, a designer of CDMA-based integrated circuits and system software for wireless voice and data communications, is expected to report EPS of 38 cents. It's rated a hold by ValuEngine, and it's 1.9% below its fair value of $47.87. The weekly chart shows flat momentum, with the five-week MMA at $46.08. The median analyst price target is $50, with a high target of $55, which is a stronger profile than my model produces. I show a monthly value level of $42.80, with a monthly pivot of $46.36 and quarterly risky levels at $51.30 and $53.79. I'd consider reducing holdings if shares rise to $51.30/$53.79.

My Metrics Explained

I evaluate the U.S. capital markets and profile all sectors, industries or specialty groups of companies. There are more than 6,000 stocks in my database.

Remember that when investing and trading in the U.S. capital markets and specific stocks, decisions should be made only after evaluating both fundamental and technical considerations. It is also equally important to manage risk/reward by having levels at which to buy on weakness and sell on strength. The way to do this is to enter limit orders to buy at a price below the market, or to sell at a price above the market.

Combining fundamentals and technicals is like trying to mix oil and water, but I believe it is necessary to do so, to the best of your ability. The levels at which to buy or sell can be used regardless of the fundamentals or technicals.

My discipline involves a three-pronged approach to measuring the risk/reward for trading or investing:

Fundamental

I use ValuEngine to define my fundamental ratings.
Strong buy: Long-term investors should start a position now.
Buy: Buy on weakness to a value level.
Hold: Add to an existing position on weakness to a value level, and reduce an existing position on strength to a risky level.
Sell: Reduce on strength to a risky level.
Strong sell: Liquidate now as a source of funds.

Weekly Chart Momentum

This approach measures the technical strength of a stock.
Overbought: 12x3 weekly slow stochastic above 80 on a scale of zero to 100.
Rising: 12x3 weekly slow stochastic rising above 20, but below 80.
Flat: 12x3 weekly slow stochastic not rising or declining, but between 20 and 80.
Declining: 12x3 weekly slow stochastic is declining below 80, but above 20.
Oversold: 12x3 weekly slow stochastic is below 20 on a scale of zero to 100.

Key Technical Levels

I identify these as a price at which to buy on weakness and at which to sell on strength.
Moving averages on daily charts: The 21-day, 50-day and 200-day simple moving averages (SMAs).
Moving averages on weekly charts: The five-week modified moving average (MMA) and the 200-week simple moving average (SMA).
Value levels and risky levels: My model includes proprietary analytics that evaluate the past nine closes in several time horizons: weekly (W), monthly (M), quarterly (Q), semiannually (S) and annually (A).