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Applied Complexity Analysis - CSCO


Thx Scotto!


Note: the following analysis is formulated as an assimilation of Fibonacci, DeMark, Elliott Wave and other technical indicators. It is offered as education and not intended as advice in any way.

Cisco is at an interesting juncture, having potentially completed an impulsive bounce off its lows from February 24th and now in the throes of a potentially corrective decline of that advance that is approaching critical Fibonacci support. If our short term analysis is correct, CSCO 'needs' one more move to a swing low beneath $17.75 (a cluster of support is in the $17.65 area and then again at $17.50) to complete the decline from March 11th.

On a larger scale CSCO may have completed an impulsive decline from its January 2004 peaks at the recent February 24th lows. Though we can "see" an impulsive pattern in that decline, and momentum divergences and DeMark indicators (daily and weekly) were present at the February lows, CSCO's short interest, put/call ratios, and analyst ratings (26 buys, 14 holds and 0 sells) is in no way excessively bearish. This lack of bearishness makes us wary that a significant multi-month bounce toward $22-24 may not be underway, as would be implied if the entire decline from January 2004 to present were a completed impulse wave.

Though we are less confident about that longer term view, we remain confident about the short term one (and the risk/reward dynamics of the analysis too are attractive). Another low beneath $17.75 that stays above $17.13 would be a good place for the aggressive interpretation calling for a move higher in CSCO. If indeed CSCO found a significant bottom on February 24th, then the potential for $22-24 over the next 5-8 months is good (not advice). Even if this longer term bullish counter-trend bounce does not play out, we would still expect CSCO to move toward new peaks above $18.80 and toward several Fibonacci targets in the $21 area (again not advice).

Please note: We are now able to offer our proprietary complexity model analysis on both stocks and/or stock indices as a daily service to institutional investors and a select number of individual investors. There are several different services available; each are provided on a monthly subscription basis and cover all U.S. indices and all U.S. stocks. Please contact us for details and rates.

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No positions in stocks mentioned.

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