Trading Qualcomm After Its Blowout Earnings Report

Qualcomm is jumping to all-time highs after better-than-expected earnings. Here's how to trade the stock.
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Stocks were enjoying a second day of notable gains on Thursday, but Qualcomm  (QCOM) - Get Report was really having some fun.

Shares have gained more than 13% on the day, after Qualcomm reported a strong quarter and provided investors with a promising outlook.

The company delivered a top- and bottom-line beat, with revenue growing 35% year over year. Both earnings and revenue guidance came in well ahead of expectations for next quarter as well.

Qualcomm has risen in each of the last four days, having put together a 20.6% rally so far this week at Thursday’s high.

The move has been enough to send shares to an all-time high, but investors are wondering just how far it can go from here. Let’s look at the chart.

Trading Qualcomm

Daily chart of Qualcomm stock.

Daily chart of Qualcomm stock.

The chart shows just how strong Qualcomm stock has been. The stock gapped up in late July, kickstarting a strong bullish trend higher.

Although the stock dipped from its early September highs like the rest of tech, notice how Qualcomm went on to make a new high in October. That contrasts with Apple  (AAPL) - Get Report, Amazon  (AMZN) - Get Report and the Nasdaq, all of which put in a lower high.

That’s was a bullish sign for Qualcomm, in my opinion, and we’re seeing it play out on Thursday.

With the post-earnings rally, shares are easily clearing the prior highs near $132. That is also the two-times range extension, approximately.

From here, bulls want to see if Qualcomm can continue to ride its momentum up to the 261.8% extension near $155. Otherwise, they may be stuck waiting for a dip to a short-term area of support, like the 10-day moving average.

On the plus side, shares are also back above a prior uptrend mark (blue line), although many would argue its relevance. Bulls can look at Thursday’s low as a risk point.

A close below this mark, at $141.83, puts a move lower in play — potentially to the 10-day moving average we just discussed.

While the markets are trading favorably after the election, there is still the potential for volatility. Should we get a larger correction, look for Qualcomm stock to find support near $130 to $132.

Otherwise, let’s see if it can start to build out a new base in the $140s and make a push north of $150.