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.
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.