Cisco’s stock price closed last week at 5-month high. The growth of the issuer’s quotes from the December 52-week low exceeded 12.5%. Earlier, Bank of America Merrill Lynch analysts lowered the company’s stock forecast, citing a lack of expected growth catalysts in 2020. Over the past week, Cisco shares rose 4.01%. The S&P 500 index for the same period increased by 1.97%.
In reviewing Cisco stock, it is apparent that it’s potential rise will be largely based on the overall health of the economy. Investors should watch for any signs of increased slowing of the economy. Key report will be next month’s Jobs Report and earnings of companies.
Today, US President Donald Trump spoke in Davos, about the success of the American economy, which is fully focused on the “prosperity of citizens”, and called on other governments to put the interests of their citizens first. In general, Trump’s speech resembled the election and did not give new information to the market.
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Investor sentiment regarding future trade relations between China and the United States remains restrained. A number of experts believe that the “first phase” of the deal can last no more than a year, after which China will not be able to fulfill the obligation to purchase US products, and the USA will introduce duties again. Market doubts about the prospects of the agreement were aggravated by Finance Minister Steven Mnuchin, who told The Wall Street Journal that perhaps not all tariffs on Chinese exports would be canceled when the “second phase” of the deal is signed. Also note that yesterday the IMF lowered the forecast for the growth of the US economy in 2020 from 2.1% to 2.0%.
The euro is weakening against the pound, strengthening against the US dollar and shows an ambiguous dynamics with the yen. The European currency is supported by data on business activity from ZEW, which significantly exceeded investors’ expectations. The indicator for Germany increased from 10.7 to 26.7 points, and for the Eurozone – from 11.2 to 25.6 points. This is the best data since the beginning of 2018 for the Eurozone and since mid-2015 for Germany. Investors clearly hope for a positive effect from the conclusion of the US-China trade deal. However, a full recovery of the European economy may take years, as evidenced by the IMF forecast. According to the fund, this year the EU economy may reach 1.3%, which will only slightly exceed the 2019 figure (1.2%).
GBP is strengthening today against its main competitors – EUR, USD, and JPY. The pound is rising amid strong data from the labor market. Employment growth almost doubled the forecast, increasing from 24K to 208K, and now there are 32.9 million employed citizens in the UK. Unemployment remained at 3.8%. Salary growth without premiums slowed in November from 3.5% to 3.4%, while with premiums it remained at 3.2%. In these data, experts see an occasion for the Bank of England not to reduce the interest rate from 0.75% to 0.50%.
Oil Prices continue to decline today. Prices are dropping as investors await the resumption of production on Libyan oil fields previously closed due to hostilities. Also, pressure on prices is exerted by statements by Iraqi officials, according to which unrest in the country will not affect the oil sector. Investors’ doubts about the prospects for the execution of the “first phase” of the US-China trade deal are also a negative factor.
Cisco Support and Resistance
The “bullish” sentiment is running strong with Cisco stock with #CSCO quotes renewed recent highs again. At the moment, the Cisco’s shares are testing the supply zone 49.50–50.30. The level of 47.00 is a key support. There is potential for further recovery. Indicators reflect the strength of buyers: the price has fixed above MA (200); the MACD histogram has started to rise. It is better to open the positions from the key levels. A comparative analysis of the multiples of the company and competing companies indicates the underestimation of #CSCO.
Resistance levels: 49.50, 51.80, 54.15.
Support levels: 47.00, 45.50, 43.40.
Cisco Stock Trading Ideas
Cisco Stock long positions may be opened after the price consolidates above the level of 49.50. The closing of the profitable positions is possible at the levels of 51.00, 52.50 and 54.00. Stop loss – 48.00. Short positions may be opened after the price consolidates below the level of 47.00 with the targets at 44.50–43.00. Stop loss – 48.50. Implementation period: 3 days.
Cisco Stock Recommendations
Jan-08-20 Downgrade BofA/Merrill Buy → Neutral
Dec-19-19 Upgrade Barclays Equal Weight → Overweight $53
Dec-12-19 Upgrade Edward Jones Hold → Buy
Nov-14-19 Reiterated BofA/Merrill Buy $62 → $56
Nov-13-19 Resumed RBC Capital Mkts Outperform
Nov-11-19 Downgrade Piper Jaffray Overweight → Neutral $55 → $51
Oct-10-19 Downgrade Goldman Buy → Neutral $56 → $48
Sep-11-19 Initiated Evercore ISI Outperform
Aug-15-19 Reiterated RBC Capital Mkts Outperform $64 → $53
Aug-08-19 Initiated Barclays Equal Weight $52
Jun-12-19 Downgrade William Blair Outperform → Mkt Perform
Feb-12-19 Downgrade Morgan Stanley Overweight → Equal-Weight $49
Dec-14-18 Downgrade Nomura Buy → Neutral
Oct-01-18 Reiterated Piper Jaffray Overweight $50 → $53
May-10-18 Initiated Credit Suisse Neutral $41
May-03-18 Initiated JP Morgan Overweight
May-01-18 Initiated Macquarie Outperform
Mar-16-18 Reiterated Citigroup Buy $46 → $52
Feb-16-18 Reiterated Argus Buy $44 → $50
Feb-15-18 Reiterated Stifel Hold $40 → $46
Cisco 1 Day Moving Averages
Name Value Action
Exponential Moving Average (5) 48.47 Buy
Simple Moving Average (5) 48.37 Buy
Exponential Moving Average (10) 48.12 Buy
Simple Moving Average (10) 47.91 Buy
Exponential Moving Average (20) 47.65 Buy
Simple Moving Average (20) 47.88 Buy
Exponential Moving Average (30) 47.34 Buy
Simple Moving Average (30) 46.91 Buy
Exponential Moving Average (50) 47.18 Buy
Simple Moving Average (50) 46.54 Buy
Exponential Moving Average (100) 47.85 Buy
Simple Moving Average (100) 47.19 Buy
Exponential Moving Average (200) 48.71 Buy
Simple Moving Average (200) 50.95 Sell
Ichimoku Cloud Base Line (9, 26, 52, 26) 46.85 Neutral
Volume Weighted Moving Average (20) 47.88 Buy
Hull Moving Average (9) 48.87 Buy