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In last week’s Dow Thirty report, JC Parets’ Eagle Bay Solutions looked into two charts for Cisco Systems, Inc. (NASDAQ: CSCO).

According to the research note, structurally, Cisco broke out comfortably above the key resistance the firm has been pointing to over the past few months.

Parets and his team continue to only want to remain long this stock “above the upper of the two converging trendlines, and more specifically above last summer's highs.”

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Parets determines: “Momentum is still in a bullish range, however relative strength is still stuck in this multi-year range, but price is what pays. Risk managment-wise, anything back into this range and we've been happy to go back to neutral. Our target just over 30 was hit last month, which represents the 161.8% Fibonacci extension from the 2nd half of 2013 correction. Now we wait for more data and approach this more tactically. Great trade.”

Short-term, prices blew up in November. They broke out above the highs hit in July, with momentum hitting overbought conditions.

Eagle Bay has preferred to approach the company from a structural perspective, and still only wants to buy on dips, as long as the price remains above the July highs.

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The founder of Eagle Bay explains that, in late December the stock hit the firm’s near-term target close to $28.30 “based on the 161.8% Fibonacci extension from the correction that began this summer.”

He concludes: “we said we've wanted to buy dips near 26 and that was in early February. At this point I still would only want to be long if prices are above 28.90. Below that and I would not want to be in this name based on that bearish divergence in momentum. If we are able to get back above that level we would have a target just under 32 based on the 261.8% FIbonacci extension of the July/October rally.”

Posted-In: Eagle Bay Eagle Bay Capital Eagle Bay Solutions JC ParetsAnalyst Color Technicals Trading Ideas

 

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