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During the last week of 1999, a Wall Street analyst placed a thousand-dollar price target on Qualcomm (QCOM) . The bodacious call triggered a historic debate about the tech bubble that was resolved decisively when the Nasdaq 100 collapsed just a few months later. The rest, as they say, is history.

My wife and I were headed up to Breckenridge, Colo., right after the pronouncement to watch the millennium clock with friends who had a cabin on the ski slopes. I recall a heated debate with our hosts during the visit, with them insisting that all things tech were topping out, while I replied this was just the beginning of a glorious bull run.

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As things turned out, the pronouncement wasn't one of my better market calls. Qualcomm posted an all-time high just a week later, and hasn't reapproached that top tick in the last eight years. That's not to say the telecommunications company is still stuck in the doldrums, which brings us to the topic of today's discussion.

Indeed, the stock has been on fire in 2008 and is currently the second-strongest performer in the Nasdaq-100 index. This raises the obvious question. Is this issue headed for even higher ground in the months ahead, and will it ever return to the most famous top of the tech bubble?

Qualcomm - Monthly Chart

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Source: eSignal

The monthly chart shows a fabulous rally that began under a buck in the early 1990s. The uptick persisted through the mid-part of the decade and then went vertical in 1999, when the tech bubble took control. The 2000 high stands out sharply from the rest of the pattern because it looks unassailable, even though price bottomed out over six years ago.

The first bounce off the October 2002 low posted a 100% gain in just two months, before the uptick fizzled out in December of that year. That top gave way to six-month pullback, which was followed by a much stronger rally lifting the stock into the mid-40s by the end of 2004. That's where a larger-scale downswing began.

The two-year recovery off the bear-market low had stalled at the 38% retracement of the downtrend, which is a typical zone for aggressive sellers to reemerge. They knocked down price for over six months before another upswing lifted the stock into the 50% retracement, completing a five-wave pattern that marked the high for the next two years.

Note how the 2006 turning point lined up with the December 2000 swing high, which marked the strongest bounce of the bear market. This added significance to the evolving resistance level, which came back into play this year. It also pointed to the trigger point where strong buying pressure should materialize after it was decisively mounted.

Qualcomm - Weekly Chart

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Source: eSignal

Price action boxed into a trading range after the 2006 top, with support in the mid-30s and resistance at the two highs. You can also see the development of a series of higher lows at the same time the broad market was convulsing in the throes of the credit crisis. This marked a bullish divergence that's now supporting the stock.

The stock rallied to within three points of multiyear resistance in June, clustered at that price level for eight weeks, and then surged higher in July. It's been holding above the big blue line for the last three weeks, but hasn't shown much progress. However, long-term indicators are lining up nicely, showing good support for a continued uptrend.

Qualcomm - Daily Chart

Click here for larger image.

Source: eSignal

Zooming into the daily view, note how the stock rolled over just prior to the gap and sold off into the 200-day moving average. Then, in a single session, price surged from deep support up to a seven-year high. This divergent action creates instability because the prior weakness is still embedded into the price mechanics, despite the huge rally.

On the flip side, price action in the last two weeks has been quite bullish, with short-term resistance marked out at 56. A break above this level would support a continued rally that lifts the stock into 60 in just a few bars. With option expiration underway, there's a chance that a buying spike will happen this week.

However, the interplay between prior weakness and current strength increases the odds that price will, sooner or later, fill the majority of the big July gap. This consolidation would translate into a pullback that drops the stock into the upper 40s, so there's no rush to get on board here.

Despite short-term pressure, the outlook for Qualcomm through year-end and into 2009 is extremely positive. If you look back at the monthly chart, you can see the 62% retracement lies in the upper 60s. This price level marks a logical target for the next leg of this strong rally.

And who knows, maybe one day the uptrend will finally hit the quixotic price target that made market history almost a decade ago.

Alan Farley provides daily stock picks and commentary with his "Daily Swing Trade" newsletter.

At the time of publication, Farley had no positions in the stocks mentioned, although holdings can change at any time.

Farley is also the author of

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. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks.

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