Since reporting a lackluster Q4 and issuing disappointing Q1 guidance in mid August, CSCO shares have been down about 13% after making multi-year highs. The one year chart below shows this morning’s breach of the stock’s 200 day moving average (yellow), a trend indicator that it has not closed below since Nov 2012.
The stock held today, but if CEO John Chambers comments from a couple weeks back on CNBC (here) about the health of the global recovery are also about the health of the company’s earnings visibility, then the stock could be at a pretty precarious spot.
The break out above $22 and above a multi-month consolidation in May on massive volume should serve as a very staunch support level for the near term, but that level is approaching quickly, with increasing volume on down days.
With the stock pausing at the moment at its 200 day moving average of about $23 and the all important $22 support/resistance level just a hair below current levels, I would be more inclined to enter as a long than press the short in front of their fiscal Q1 earnings due Nov 13th. We are keeping a close eye on the quickly shifting sentiment in the name.
The chart below of at the money 30 day implied vol (blue line) vs the realized vol (white) shows IV quickly rising while realized has barely picked up, this has a lot to do with IV in the market picking up despite CSCO shares just grinding lower. This set could make calendars look attractive, stay tuned.