Looking At Qualcomm

01/10/13 07:55:23 AM

by Koos van der Merwe

Action around the Consumer Electronics Show got under way on January 7, with a preshow press event for Qualcomm Inc.

Security: QCOM
Position: Buy

Qualcomm CEO Paul Jacobs delivered the opening address on Monday night, a slot traditionally held by Microsoft CEO Steve Ballmer. Qualcomm announced new products for its line of modems and application processors used in smartphones and tablets.

FIGURE 1: QCOM, DAILY. This chart shows a buy.

Graphic provided by: OmniTrader.

In Figure 1, a daily chart of Qualcomm, the vote line has given a buy signal on January 2, 2013. The share price rose strongly to $64.75 but then fell over the next two days to its present low of $63.50.

FIGURE 2: QCOM ADVISOR RATING

Graphic provided by: OmniTrader.

The advisor rating shown in Figure 2 is 50, with an entry price at $64.75 on Thursday, January 3, 2013. The strategy that triggered the buy signal was the internal band strategy. However, a look at all the strategies below the vote line shows that all the strategies with the exception of the relative strength index (RSI) 12-period gave buy signals.

FIGURE 3: QCOM, MONTHLY

Graphic provided by: AdvancedGET.

Figure 3, a monthly chart, shows how the price rose from $2.85 in October 1998 to a high of $99.87 by January 2002. With the bursting of the bubble, the share price dropped to $11.96 by August 2002. Since then, the price has risen steadily to a high of $69.58 by March 2012 in what could be a rising wedge. Note how the price traded between the 61.8% and 50% Fibonacci levels since March 2012. The RSI is suggesting future weakness. However, should the price rise above the $69.58 pivot point, the price could rise higher.

The charts are suggesting that for the short term, Qualcomm is a buy, but the monthly chart is suggesting long-term weakness.

Koos van der Merwe

Has been a technical analyst since 1969, and has worked as a futures and options trader with First Financial Futures in Johannesburg, South Africa.

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