
Qualcomm Charts: Expect a Break Higher
By L.A. Little of tatoday.com, author of Trade Like the Little Guy.
A couple of months ago, we looked at the four largest weightings in the Nasdaq-100 index.
Qualcomm
(QCOM) - Get Report
, a large-cap technology stock that is riding the latest mobile telecommunications wave, has the third-largest weighting in the index (just fractionally behind
Microsoft
(MSFT) - Get Report
) and has reached an important technical area that requires attention. As such, it is an appropriate time to circle back to
and take a look.
As a refresher, in November I was thinking QCOM was finished with the move higher and would retrace. Well, it did stop going up, but rather than retrace more deeply as expected it worked its way mostly sideways for six weeks. Six to seven weeks are normal consolidation periods after a strong move.
That is a bullish sign on the short- to intermediate-term time frames.
Unlike the break higher in early November that was a confirmed trend change, during the late December break higher Qualcomm's push up only registered as
. That type of action tends to cause most would-be buyers from actually buying. Qualcomm then continued to work higher through the holidays until Monday when volume picked up as price did, and then Tuesday, when it took off on volume.
Now QCOM has the look of a stock that could break higher once more as seen on the short-term time frame chart.
When you look at the long-term chart you realize how important this push higher is.
If this resistance swing point gives, $50 is a heartbeat away and $55 becomes a legitimate target.
What would it take to get there? Here's a weekly chart that shows just that.
Doing some quick math, three more days with average volume of 28 million shares a day would yield the volume numbers needed. If volume drops off and you are bullish on the stock, you would want QCOM to stop ascending and hold up here just underneath the highs.
A short consolidation of a few days or even a week or so just under the highs would give this stock the power to break topside, removing the weekly swing point on volume. That would create a confirmed bullish trend on all three time frames, and you want to be in that trade if it does in fact occur.
That's the way it looks from this trader's turret, so until next time, keep trading the charts!
At the time of publication, Little was long Qualcomm, and short the Nasdaq-100 index via Short QQQ ProShares, though positions can change at any time.
L.A. Little, author, professional trader and money manager, writes daily on
www.tatoday.com
, a free educational site for traders and investors. He has been featured in numerous publications and is the author of
.
His background includes degrees in philosophy, computer science, computer information systems and telecommunications. With a trading philosophy centered on capital protection first and the accumulation of consistent gains over time, L.A. espouses a simplistic technical approach to trading the markets that is a throwback to the days of past. With a focus on swing points and the qualification of trends, L.A. provides a breath of fresh air to an otherwise crowded room of derivative indicators with the emphasis on technical minutiae.









