Shares of Cisco (CSCO) - Get Report are surging today. The stock is up over 2% as it extends an impressive rally off last week's low to nearly 8%. This rally leg has pushed the stock back up to a major level.
Cisco is now within easy striking distance is the March/April highs of $28.70. Once clear of this heavy resistance zone, Cisco will be trading at fresh 2016 highs.
Back in late March, Cisco first began to battle the $28.70 area after its huge run off the January/February double bottom ran out of momentum. As April wore on, the stock put in multiple weekly highs near the heavy supply zone. Late that month, it appeared that Cisco was on the verge of a significant breakout, but once again shares faded. The final result, as the month came to a close, was a nasty breakdown. Once the stock fell below $27.80 level, the bottom fell out.
Roughly three weeks ago, Cisco left behind a powerful upside reversal after reaching support near the November/December lows. The stock quickly returned to its 200-day moving average where it remained in a narrow range until last Thursday. Cisco surged over 3% on very heavy trade that day and is building on the momentum today. This has driven the stock to within pennies of a major breakout. Once shares have cleared the March/April highs, there is plenty of room to run. If a pullback is needed before the $28.70 level is cleared, Cisco bulls should view the $28.30 to 427.80 area as a low-risk buy zone.
Disclosure: This article is commentary by an independent contributor. At the time of publication, the author was long Cisco.