Buy the Dip in Qualcomm - Here Is Where

Qualcomm is slipping despite better-than-expected earnings. Here's where to buy the dip in the stock.
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Qualcomm  (QCOM) - Get Report shares were down 3% in Thursday’s trading session, after the company’s fiscal first-quarter earnings. Could this be an opportunity for investors?

At the morning lows, Qualcomm stock was down more than 5%. That’s despite earnings of 99 cents a share topping expectations by 14 cents, while revenue grew 5.4% year over year to $5.08 billion and beat estimates by $250 million.

Management’s outlook was mostly in-line with expectations. Qualcomm expects earnings in the range of 80 cents to 95 cents a share on revenue in the range of $4.9 billion to $5.7 billion. That compares to consensus expectations of 85 cents pin profit on $5.07 billion in sales.

At the midpoint of management’s guidance the outlook is technically a beat, but the stock is not trading like it on Thursday. That makes Qualcomm an excellent candidate for Real Money’s Stock of the Day

Here's what Wall Street's saying now

Trading Qualcomm Stock

Daily chart of Qualcomm stock.

Daily chart of Qualcomm stock.

After patching up its relationship with Apple  (AAPL) - Get Report, Qualcomm stock has been on a tear. That said, it’s been a volatile tear, as shares have gradually worked their way higher over the past few quarters.

That’s evident by the stock’s series of higher lows, as an uptrend support mark (blue line) has formed from April 2019. Unfortunately, Qualcomm stock didn’t quite dip that far on Thursday’s post-earnings fall.

Instead, it’s rebounding and in doing so, the stock is reclaiming the $88 mark and the 50-day moving average. If it can hold above this area, then perhaps it can close its post-earnings gap up to $90.91.

Above that and bulls will likely look to take Qualcomm stock back up to the 52-week high north of $96.

If Qualcomm stock can’t hold the 50-day moving average and $88 level, then perhaps we will get a dip down to the 100-day moving average and uptrend support. That comes into play near the $84 to $85 area, and in my view, would represent a great dip-buying opportunity.

Qualcomm reported a top- and bottom-line beat, issued solid guidance and looks to have a strong 12 months to 24 months of business on the way. Buying a dip into that situation is attractive in my view.

Should the 100-day moving average and uptrend support fail as support the $80 level and 200-day moving average could be in the cards.

For now though, let’s keep it simple. Above the 50-day moving average puts $90-plus on the table. Below the 50-day keeps open the possibility that shares will test into trend support, giving bulls a possible buying opportunity. 

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