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The Inner Circle, Issue #425 - Running out of momentum?
June 01, 2014
Hi <>,

Running Out Of Momentum?

FROM: Running out of momentum?

Stocks rise until they meet resistance then reverse until they find support.

Cisco Systems (CSCO):

MarketClub's Trade Triangle Technology algorithm currently ranks CSCO Primary (monthly) Trend 'UP'.

Week ending 5/30 CSCO closed 24.62 (Yield: 3.08%).

CSCO ranks 9th of the 10 highest yielding DJ-30 'Dow Dogs'.

CSCO is now 1st of 5 lowest priced among the 'Dow Small Dogs'.

Key primary support algo to watch: 3/21 low 21.29 (lowest low - last 3 mo).

CSCO recent algo: 5/14 low 22.63 (lowest low - last 3 wks).

CSCO found support at 5/14 low 22.63. After the close, earnings surprised to the upside. Next day, opened gap up reaching 5/15 high 24.69 where it found resistance.

CSCO found support at 5/20 low 24.02. 5/21 50 sma 'golden crossed' the 200 sma.

CSCO currently testing resistance. CAUTION: Is CSCO forming an 'Island Top', digesting recent gains before resuming upward move, or searching for new support?

CSCO currently above both the 50 & 200 sma on daily chart (favorable).

CSCO currently above both the 50 & 200 sma on weekly chart (favorable).

Earnings are rising.

Earnings: 5 yr avg EPS: 1.37. (ttm) EPS: 1.48. Current P/E: 16.57. Forward P/E: 12.10.

Est Avg Yr EPS: 2.04. Est Yr High EPS: 2.06. Est Yr Low EPS: 2.03 (per analysts).

Next Qtr Est Avg EPS: 0.53. Est High EPS: 0.54. Est Low EPS: 0.51. Prior Qtr EPS: 0.42.

The combination of low price/high yield + support at the 50 & 200 sma = opportunity (IMO).

Whether you buy stock, protect with puts (& collect dividends) or buy calls (whatever suits your style), a limited risk/high reward position can be constructed. Each strategy has its own follow-up tactics, depending on how it plays out.

NOTE: CSCO is deeply involved in cyber security; we are under attack.

Next earnings date: 8/13/14.

Comments? Ideas? Feedback? Let me have it, right between the eyes! I'd love to hear from you. Just reply to this zine and tell me what you think!
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