Don't Ignore This Chart!

The Next Big Tech Stock to Watch for a New High


Stocks hitting 52-week highs are in clear uptrends and they are the market leaders. I am not going to feature a stock hitting a new high today, but rather look at one that has a good chance of hitting a new high in the coming weeks. The weekly chart below shows Cisco (CSCO) with a resistance zone extending back to the February 2015 highs. A break above this zone would put the stock at a 52-week high and be quite bullish. The indicator window shows the price relative with a similar resistance zone. A break above this zone would signal a breakout in relative performance. I will next look at the daily chart to assess the chances for a breakout. 

The daily chart shows the stock surging off the 200-day moving average with a gap and big volume. First, notice that the stock surged over 25% from early February to late April. Even though the decline back to 26 was sharp, it retraced around 50% of this advance and returned to the 200-day. This looks like a two-steps up and one-step back sequence. The gap and surge on high volume mark a successful test of the 200-day and the evidence is bullish right now. I would expect Cisco to move to new highs and potentially lead the market as long as the gap holds. Chartists can re-evaluate this bullish thesis on a close below 26.50.

Thanks for tuning in and have a great day!
--Arthur Hill CMT

Plan your Trade and Trade your Plan

Arthur Hill
About the author: , CMT, is the Chief Technical Strategist at Focusing predominantly on US equities and ETFs, his systematic approach of identifying trend, finding signals within the trend, and setting key price levels has made him an esteemed market technician. Arthur has written articles for numerous financial publications including Barrons and Stocks & Commodities Magazine. In addition to his Chartered Market Technician (CMT) designation, he holds an MBA from the Cass Business School at City University in London. Learn More
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