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It's been more than a year

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It's been more than a year since shares of Cisco Systems (NASDAQ:CSCO) traded above it 200-day moving average (long-term), but tech investors wondering if this stock is truly turning a corner should have their answer in the next couple of weeks. It's something that takes monitoring over time, but the past two weeks action near and today's break above the 200-day moving average is bullish longer-term.

Cisco Systems Chart - weekly interval

There are a couple of technicals developing for Cisco Systems (NASDAQ:CSCO) that have this stock looking like it is turning the corner longer-term. The breaking of the 200-day moving average to the upside is one sign, but also the volume on the weekly chart. When Cisco (CSCO) was on a torrid upward trend, the stock saw several periods where volume was positive (black bars in volume). Since breaking below its 200-day moving average, CSCO has not been able to post positive volume for 6 straight weeks, but recent volume action is similar to those periods dating back to early and late 1999.

For LEAPS investors, they may be interested in a 1/2 position long in the Cisco Jan03 $20 calls (VYCAD) offered $5.00 or the Jan04 $20 calls (LCYAD) offered $6.90. With the NASDAQ-100 bullish percent at 71% bullish, we might see a pullback in the stock and limiting a longer-term investment with a 1/2 position might be wise near-term. Then, if the stock is able to break above this spring's highs of $24.13, a bullish trader could average up into the position to a full position.

Jeff Bailey
Senior Market Technician
Option Investor

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