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Cisco Rides Tonight


Caught between a rock and a hard place, eh?


The focus after the close will turn to Cisco (CSCO) earnings as the company reports Q4 (July) results.

Although CSCO rarely reports earnings significantly out-of-line with expectations, there has been talk on the Street that this report will be more volatile than previous reports citing consistent call buying ahead of the report. Meanwhile, as Bernie Schaeffer noted on the Buzz & Banter this afternoon, still others expect the stock to do very little in the wake of earnings.

Point & figure charts can provide a context for near-term movement that may (debatably) be associated with the release of earnings results. More importantly, they can provide a means for quickly identifying key areas or inflection points in a stock so that someone involved in the position can determine attack lines (or defense lines, as the case may be) and therefore avoid an emotional response to what is often purely "noise."

Consensus estimates:
Q4 (July): $0.25 EPS on revenues of $6.56 billion
Q1 (Oct): $0.25 EPS on revenues of $6.63 billion
FY '05 (July): $0.91 EPS on revenues of $24.82 billion
FY '06 (July): $1.05 EPS on revenues of $27.81 billion

Here is the chart of CSCO with the inflection points identified.

Cisco (CSCO) chart courtesy Dorsey, Wright & Associates

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