Qualcomm Stock Sitting Right At The Long-Term Uptrend Line

Shares of Qualcomm, Inc. QCOM have been crushed recently right along with the broader market. Unlike the market, Qualcomm shares are sitting right at their long-term uptrend line support at $70.37, which corresponds nearly perfectly with the horizontal line support created by the September 2013 peak.

If there was ever a time for the bulls to stand their ground and force the shorts to go play elsewhere, this might be it.

A Birds' Eye View Of Fundamentals

The bearish crowd surrounding Qualcomm currently points out that although the price-to-earnings ratio on the stock (based on forward earnings) comes in at around 14, the revenue and earnings growth estimates for 2015 only come in at 7.9 percent and 4.9 percent, respectively, which makes a cheap-looking 14 P/E not as cheap. None of the other valuation metrics really favor the bulls' argument either.

What the bulls do have in Qualcomm is a company that makes huge cash flows of over $7 billion annually off of nearly 30 percent profit margins. That allows the company to stay nearly debt free and to build a huge cash reserve, which could theoretically be used for acquisitions.

Technical Take

As noted above, technicians point out that Qualcomm is trading right at key long-term uptrend line support at $70.37. If the stock can hold up there, a nice rally back up to $73, $75 or $77 – all horizontal lines of resistance – should occur. However, the technical pattern setting up in Qualcomm is not necessarily friendly to the bulls on an intermediate-term to longer-term basis and a bounce up to any of the three named levels could simply be corrective in nature.