NEW YORK (TheStreet) -- Tech giant and Dow component Cisco Systems (CSCO) reports third-quarter earnings after the closing bell on Wednesday, and the stock may see a jolt of volatility in reaction to either positive or negative results and guidance.
While Cisco has not been a momentum stock since 2007, recent earnings reports have provided short-term volatility -- which could mean trading opportunities. The stock peaked in 2008, after a 100% jump to a multiyear intraday high of $34.24 in Nov. 2007 from $17.10 in August 2006. After being stuck in a wide trading range for the past couple of years, the stock is not a "buy and hold" investment.
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Here are some strategies for Cisco Systems stock, based on key trading levels:
- If the stock pops above a key technical level, at $25.55, investors should enter a "good 'til canceled" limit order to sell strength until it hits another key technical level at $27.50.
- If the stock does not have an upside reaction, investors should enter a "good 'til canceled" limit order to buy weakness until it reaches $22.15, another key technical level.
Here's the daily chart for Cisco that justifies this "buy and trade" strategy.
Courtesy of MetaStock Xenith
The daily chart for Cisco ($25.15) shows the volatility over the last two years. Cisco set a multiyear intraday high at $26.49 on Aug. 7, 2013, then fell below its 200-day simple moving average (green line) at $23.06 on Nov. 15, 2013, to $20.22 into Dec. 13, 2013, for a correction of 24%.