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Friday, May 08, 2009

Cisco Stock Testing Key Support Level

Cisco Systems (more CSCO charts) is testing its 200-day moving average (DMA) from above as the bulls and bears do battle over this key level. During bull markets, the 200 DMA is support while in a bear market, the 200-DMA is resistance.

Click chart courtesy of stockcharts.com for full size image

Quite often, after resistance changes to support, there is a test from above of the new support level before the stock takes off for big gains.

KEY bull/bear battle:
  • If bullish, buy with a stop-loss below the 200 DMA for what you are willing to lose. If this is a new bull market, then the 200-DMA should become support rather than resistance.

  • If bearish, this is a good place to unload before your expected decline to new lows just as the rally above the 200DMA in 2001 was a good place to get out above $20 before falling to $8 and change in 2002.


I've traded Cisco in the past but I don't have a current position. I prefer other stocks (listed in Kirk Lindstrom's Investment Letter Explore Portfolio.) Also, I did so much buying of other stocks when the market was lower, that now I am looking to take some more profits rather than add more stocks.

Since 12/31/98 through 5/8/09 "Kirk's Newsletter Explore Portfolio" is UP 107% (over a double!) vs. the S&P500 DOWN 11% . Subscribe NOW and get the May 2009 Issue for FREE!

Remember, the S&P500 (S&P500 charts) is up in the 900s from just recently being in the 600s. A correction could come out of nowhere at any time.

The bears think this is a bear market rally before the market makes new lows. By taking some profits on what we bought at much lower levels, we have funds to buy again if the market corrects.

More information:
Doubled Money in a Down Market!
Since 12/31/98 "Kirk's Newsletter Explore Portfolio" is UP 107% (over a double!) vs. the S&P500 DOWN 11% vs. NASDAQ down 21% vs. Warren Buffett's Berkshire Hathaway (BRKA) up "only" 35% (All through 5/8/09) (More Info)

HURRY! Subscribe NOW and get the May 2009 Issue of "Kirk Lindstrom's Investment Newsletter" for FREE! !

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