When we previewed the Qualcomm quarter, we took a look at the technical setup. In that preview we said that, if shares were to rally, it's important for Qualcomm stock to take out its highs and hold that prior mark as support.
Bulls will want to see that thesis hold through Friday, while the recent quarterly report should help.
Earnings of 78 cents per share topped expectations by 7 cents per share, while revenue of $4.81 billion beat analysts' expectations by $100 million despite slumping 17.5% year-over-year.
Revenue guidance for the coming year was in-line with expectations, while the midpoint of management's earnings guidance eked past consensus estimates. Will the results be enough to kickstart a larger move higher?
That question has Real Money talking about Qualcomm, naming it their Stock of the Day.
Let's look at the charts.
Trading Qualcomm Stock
After falling below $80 in May, Qualcomm stock was repeatedly rejected from this mark. However, each rejection from resistance resulted in a higher low, as the dips became more and more shallow.
Finally in late October, QCOM stock broke out over resistance. As we highlighted in the pre-earnings setup, the pullback to $80 served a vital clue, as former resistance had turned to support. Before the report, that was considered the must-hold level if Qualcomm were to retreat on the results.
Instead though, Qualcomm shares are rallying on the day, and making new highs in the process. Ideally, the stock will stay north of $90, alternating between consolidations and grinding higher to prevent it from becoming too overbought.
However, it may not pan out that way. Instead, bulls should see that QCOM stock stays above the $87.50 mark, which was about the ceiling when shares topped out in May. If you want to get technical, over $88.82 is the line in the sand, the prior high from Q2.
But as long as shares are over $87.50, Qualcomm looks OK on the long side. Worth mentioning is that the stock does have a Fibonacci extension up at $100, giving traders a nice round and psychologically important target to aim for going into year end.
The long story short: Below $87.50 and investors need to be cautious. Over $90 is bullish.
This article is commentary by an independent contributor. At the time of publication, the author had no positions in the stocks mentioned.