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Expect Another Great Report From Qualcomm Wednesday

From a technical analysis perspective, the 200-day moving average is within a bullish climbing trend. Unfortunately, the faster-moving averages are relatively placid and after falling below, shares are now trading lower than the 60-day and 90-day moving averages.

Last week, the 200-day moving average was more or less tested. While support held, another test (for example, after earnings) may push the chart dangerously close to a bearish trend. Keep a close eye on the $62 price area.

A disappointing earnings release may cause a price drop below $62 and the chart may shift from bullish to bearish shortly after. On a positive note, I believe Qualcomm will not only meet, but will beat expectations. I expect earnings above $1.18 per share.

Shareholders receive $1.40 annually in dividend payments, placing Qualcomm's yield at a highly respectable 2.2%. Moreover, the payout ratio is less than 30%, placing expected future dividends well into the safety zone I like.

Forget about short-sellers zeroing in on Qualcomm -- almost zero desire with only 0.8% of the float shorted. That's a lower rate than Apple even at Apple's $700 per share peak.

Qualcomm investors appear to be in good shape now, and I expect the same after the company releases earnings. If you're an investor wanting to lower your volatility this week, look to sell the May $70 calls for 20 cents or more if your transaction costs are not cost-prohibitive.

QCOM Revenue Quarterly Chart QCOM Revenue Quarterly data by YCharts

At the time of publication the author had no position in any of the stocks mentioned.

This article was written by an independent contributor, separate from TheStreet's regular news coverage.
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