Updated with comments from Jim Cramer and Jack Mohr.
NEW YORK (TheStreet) -- Shares of Cisco Systems (CSCO) have positive daily and weekly charts which favors a positive reaction to earnings after the company reports quarterly results after the closing bell on Wednesday.
The Internet networking giant set its all-time intraday high of $82 in March 2000, then fell victim to the popping of the tech bubble. During the current technology rally, shares of Cisco have traded to a multiyear intraday high of $30.31 set on March 2, and a new multiyear high is possible given an earnings beat. Here's why:
Cisco has an excellent track record on the earnings front: It has beaten analysts' estimates in 16 of the last 17 quarters. Analysts expect the company to earn 48 cents a share after the closing bell on Wednesday. On Monday Pacific Crest upgraded the stock to overweight from sector perform setting a price target of $36.00. Recently, RBC Capital Markets reiterated their outperform rating and raised their price target to $33.00.
Cisco is up 5.1% for the year to date, outperforming both the Dow Jones Industrial Average, which is up just 1.4%, and the Standard & Poor's 500 Index, up 2%. Cisco is matching the performance of the Nasdaq Composite Index, which is also up 5.1% in 2015.
Jim Cramer, portfolio manager, and Jack Mohr, research director, of Action Alerts PLUS, which has Cisco as a holding, said they wouldn't be surprised if the company provides "conservative guidance for its upcoming quarter as [the fiscal fourth quarter] will be incoming CEO Chuck Robbins' first quarter at the helm. Ultimately, we believe the risk/reward is skewed to the upside with CSCO shares currently trading around 13 times FY15 EPS estimates with a 2.9% dividend yield."
Let's look at the daily and weekly charts for Cisco, and examine the key technical levels at which to buy on weakness and the key technical levels at which to sell on strength.
Investors who are unfamiliar with technical analysis should begin with the notion that a price chart for a stock shows a road map of its past performance, which provides guidance for predicting future share price direction.
Here's how to read a daily chart. There are two moving averages to follow: The 50-day simple moving average is in blue while the 200-day simple moving average is in green.
Here's how to read a weekly chart. This chart shows weekly price bars going back to the Crash of 2008, and includes all of the current bull market for stocks that began in March 2009. The red line tracks the ups and downs of the key weekly moving average. The green line is the 200-week simple moving average. The red line that oscillates along the bottom of the chart is the momentum reading on a scale of 00.00 to 100.00. A reading below 20.00 means the stock is oversold and a reading above 80.00 means it's overbought.
A technically positive weekly chart occurs when a stock ends a week above its key weekly moving average with the momentum reading rising above 20.00.
A technically negative weekly chart occurs when a stock ends a week below its key weekly moving average with the momentum reading declining below 80.00.
Here's the daily chart for Cisco Systems.
Courtesy of MetaStock Xenith
Cisco had a close of $29.23 on Tuesday, up 5.1% year to date, with the stock 13% above its 2015 low of $25.92, which was set on Feb. 2.
The stock has been above its 200-day simple moving average since Oct. 28, when this average was $23.80. The stock gapped higher on Feb. 12 following an earnings beat reported after the closing bell on Feb. 11.
The price gap is from the Feb. 11 high of $27.65 to the Feb. 12 low of $28.84. After setting the multiyear intraday high of $30.31 set on March 2. The stock succumbed in a 12% correction to as low as $26.62 on March 26 more than filling the Feb. 11 - Feb. 12 price gap.
The stock is now above its 50-day and 200-day simple moving averages of $28.38 and $26.72, respectively.
Here's the weekly chart for Cisco Systems.
Courtesy of MetaStock Xenith
The weekly chart for Cisco will stay positive if the stock closes on Friday above its key weekly moving average of $28.65, as its projected momentum reading of 61.45 is rising from 57.26 a week ago.
Investors looking to buy Cisco Systems should place a good-till-canceled limit order to purchase the stock if it drops to $27.90, which will be a key level on technical charts until the end of June.
Investors looking to reduce their Cisco holdings should place a good-till-canceled limit order to sell the stock if it rises to $29.71, which will be a key level on technical charts until the end of May.