Shares of Qualcomm (QCOM) - Get Report may have finally reached a significant low. The stock has been under steady pressure since the October high as it works on its fourth straight lower monthly high. This bear trend appears to have reached a major support zone that could provide the footing for a healthy recovery move. For patient Qualcomm investors, the area between $43.50 and $42.25 should be viewed as a low-risk buy zone.
Back on Nov. 5, Qualcomm's October rally ended with a massive breakdown. The stock fell over 15% that day following its fourth-quarter earnings report. This huge collapse began with a giant downside gap on extremely heavy volume. By the close on Nov. 5, Qualcomm was below its August and September lows. The stock has been on its heels since and, at this week's low, had lost over 30% from the November peak.
This month, as shares put in a lower low, downside momentum has eased dramatically. The stock has been putting in a divergent moving average convergence/divergence low during this process, indicating that a solid bottom is beginning to form. As this process continues, investors should consider the stock a low-risk buy near current levels.
Qualcomm's support zone includes the January and early February lows between $43.50 and $42.50. A close back below the $42 level would indicate that a more drawn-out basing pattern will be needed before the stock can mount a healthy rebound.
Disclosure: This article is commentary by an independent contributor. At the time of publication, the author was long QCOM.