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CSCO Could Be on the Verge of a Major Upside Breakout and Acceleration


Below is my constructive, bullish analysis of Cisco Systems, Inc. (CSCO) discussed in our May 10, 2017, discussion, when the stock was trading at 33.64/65.

This morning, CSCO opened on an up-gap in reaction to both Morgan Stanley's upgrade to OW from EW, a revised upside target of 39 from 32, and "security-driven networking share gains over the longer-term."

The recent/current "WannaCry" ransomware attacks tangentially benefit CSCO, which combined with Morgan Stanley's enthusiasm dovetails with my increasingly bullish intermediate and longer-term outlook calling for a challenge and hurdle of key resistance 34.53/60 that triggers upside targets of 35.60/90, and then 37.00--38.00 thereafter, in route to 41-43.

Keep in mind, that CSCO reports quarterly earnings on Wed, May 17, after the close.

The fact that Morgan Stanley upgraded CSCO right in front of earnings, coupled with the bullish technical set-up, suggests strongly that CSCO just might be entering a "research sweet spot" in the days directly ahead. Last is 34.44/45

May 10th CSCO Analysis-- has a potentially spectacular longer-term technical set-up that exhibits a hug accumulation period that originates during the 2001 Nasdaq (dot com) implosion, and which is flirting with and upside breakout that will have far-reaching, and very positive implications for the company going forward. We could just "Buy and Hold" CSCO in our Model Portfolio, into and through earnings next Wednesday. Of course, if we are in the slightest bit price sensitive, then waiting until after earnings might be wise, especially because at the most recent new multi-year high at 34.60 established two days ago (5/08/17), let's notice on the daily chart that RSI and MACD Momentum failed to confirm the new high price strength, and as such, provides compelling caution near term-- into earnings. As we speak, the price structure is bearing down on the up-sloping 20-DMA, now at 33.53, which if violated and sustained, will point CSCO towards filling the up-gap left behind on April 24 (32.82-33.18), and, thereafter, possibly to test the mid-April pivot low at 32.42. Right now, my inclination is to watch CSCO's behavior in and around its 20-DMA today, but looking to start a position ahead of earnings ideally in the 33.00 area in the hours/days directly ahead. MJP 5/10/17 at 33.64/65

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