Hey Chris, remember last week when you were talking about CSCO in the stockpit ?
You could probably tell that I had reservations regarding whether it had truly bottomed. Maybe it has or maybe it hasn't but, I wanted to post a few charts that give a pretty good picture of what's going on with CSCO and the NASDAQ in general.
quote.yahoo.com
quote.yahoo.com^IXIC&d=1ym
My interpretation of what's going on from the charts:
Up until April, the 50 day moving average (dMA) represented lower support. From Oct 99 - April 2000 ("The Winter of Flying Pigs"), CSCO never even touched that line, but if you look at a longer chart, you will see that in general, CSCO tracks its 50dMA.
This all changed in April when CSCO fell below its 50 dMA and found support at its 200 dMA. This held until Sept, when CSCO began trading below its 200 dMA, with its 50 dMA being its upper resistance level . The same is true for the NASDAQ.
The fact that the charts clearly show the relationship of price to 50 dMA and 200 dMA is no coincidence. This is how big money moves in and out of the stock market.
IMO, the sign that the correction is over is when CSCO makes a run for its 200 dMA, pulls back to its 50 dMA, and bounces off of it. Same goes for the NASDAQ. Of course, the reversal will be very quick and powerful -- a great money making opportunity. There will also be lots of trading opportunities in between.
Regards,
Chris |
