Cisco Remains Near a Critical Level

Cisco (CSCO) remains under pressure following last week's disappointing earnings report. The Action Alerts PLUS holding fell nearly 5% as the Nov. 17 session opened with the help of a huge jump in volume. This nasty breakdown left behind a very ominous multi-month high near $31.

If Cisco is unable to hold major support near current lows, a deep pullback may be ahead. As we head into the long weekend the stock is stable but still vulnerable.

Cisco is a holding in Jim Cramer's Action Alerts PLUS Charitable Trust Portfolio. Want to be alerted before Cramer buys or sells CSCO? Learn more now.

Since peaking in early September, Cisco has remained in a very narrow range. This healthy consolidation pattern followed the stock's major bull move off the January and February lows, a rally that drove shares over 40% higher. Despite the steep post-earnings drop last week, Cisco remains within this range but overhead pressure is increasing.

Patient Cisco investors should keep an eye on the action over the next few weeks. A failure to hold this area could spell trouble through year end.

Cisco bulls should consider the stock a low-risk buy near current levels. The stock is sitting in a major support zone between $29.85 and $29.20. This key area includes important monthly highs from the second half of 2015 as well as the June high this year at the upper band and the 200-day moving average at the lower band.

A clear break of the $29 area would send a clear warning sign that a deeper post-earnings pullback is ahead.

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This article is commentary by an independent contributor. At the time of publication, the author was long CSCO.

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