Cisco Systems (CSCO) is another big tech name that's trending right now. Cisco spent the final half of 2013 trending lower, swatted down on every successive test of the red dashed resistance line on the chart. But that changed at the start of this year, when CSCO broke topside and started making higher lows.
That makes Cisco a "buy the dips" name worth watching in May, as shares come down to test support again. The last two similar scenarios have provided stellar risk/reward tradeoffs for buying Cisco, and the third has precedent on its side.Like with Microsoft, the optimal time to be a buyer comes on a bounce off of trendline support. Why wait? Holding on is crucial for two big reasons: it's the spot where shares have the furthest to move up before they hit resistance, and it's the spot where the risk is the least (because shares have the least room to move lower before you know you're wrong). Remember, all trend lines do eventually break, but by actually waiting for the bounce to happen first, you're ensuring CSCO can actually still catch a bid along that line before you put your money on shares.
Check Out Our Best Services for Investors
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Model portfolio
- Stocks trading below $10
- Intraday trade alerts