Qualcomm (QCOM) stock has been on fire ahead of its fiscal fourth-quarter earnings report after the markets close Wednesday.
In fact, most of the stocks in the semiconductor, chip and memory space have been red hot. Advanced Micro Devices (AMD) and Qorvo (QRVO) are hitting new 52-week highs. Nvidia (NVDA) is at its 2019 highs and is close to new annual highs as well. Intel (INTC) also is close to making new 52-week highs too.
The space has momentum and it comes at a time when investors believe there's a trough in the business cycle. It also comes as the White House is hammering out the first phase of a trade deal with China. As many have realized, an escalating trade war is bad for many companies - chip stocks included. If this event can go from a headwind to a tailwind that will bode well for Qualcomm and its peers.
That said, Qualcomm has many other considerations beyond how its peers are trading and the trade war. There's also 5G coming down the pike, working with Apple (AAPL) and dealing with its regulatory legal headaches.
Despite all of these issues, QCOM could burst to new highs if it reports a favorable quarterly result and gives as solid outlook for fiscal 2020. Let's take a closer look at the charts.
Trading Qualcomm Stock
Trading near $85 now, this is around the area where Qualcomm stock ran out of steam in April and May. With a current hit of $88.82, bulls will surely be focused on taking out this mark if the earnings report is favorable.
What if the report isn't favorable?
A pullback wouldn't be the worst thing in the world. After QCOM stock erupted higher earlier this year, shares promptly tumbled lower, back down into the $60s. On subsequent rallies, shares could not push through the $80 mark.
As Qualcomm stock put in a series of higher lows (blue line), it was forming an ascending triangle pattern. That's a bullish setup where uptrend support continues to squeeze the share price against a static level of resistance.
In October, resistance finally gave way and shares ran to ~$83. However, the most notable development came when QCOM stock pulled back, and former resistance acted as support at $80.
All of this is to say that, should Qualcomm pull back on earnings, bulls need to see $80 hold as support. Below and $75 would be the next must-hold mark, which is the 100-day moving average and uptrend support.
On a bullish reaction, see if QCOM stock can clear and close above $88.82.
This article is commentary by an independent contributor. At the time of publication, the author had no positions in the stocks mentioned.