CSCO reports after the bell this evening. John Chambers is an excellent CEO. He receives a beating from pundits, share-holders, even the newspaper boy, everyone always lining up to bash him, but you do not run a multi-billion dollar company for years and years without knowing what you are doing. Chambers takes heat since he is one of the very few CEO's that will actually provide a more direct take on economic conditions, and many times the news may not be optimistic. Typically, CEO's are simply cheerleaders for the company. They parade in front of camera's and talk happy, that is their job. So it is always refreshing to hear Chambers' take after the bell today, and his words will carry clout in the tech sector tomorrow.
The charts show the big upswing from the mid-November low, like most every other stock, resulting in rising wedges, overbot conditions (that the daily is coming off of but the weekly is now printing), and negative divergence have created the weakness just beginning over the last week. The daily chart shows the purple negative divergence that created the smack down in January. The money flow wants to see some price elevation maintained for a week or so before rolling over. CSCO is very much in a wide sideways range for the last two years through 14-21.
With earnings anything can happen in a couple hours; a catapult to glory or a collapse to humiliation. The charts say down to sideways down moving forward. The daily chart has a H&S vibe going with the latest two tops as a double head, or head and right shoulder, so a continued lower move would target 20. Note how price is dancing on top of the 20-day MA, a critical moving average. The bulls need to hold this level, the bears want it to fail. Projection is a move through 18.5-21.5 for the weeks and months ahead. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.
Note Added 2/13/13 at 4:07 PM: CSCO earnings are 51 cents versus 48 cents estimate, and 12.1 billion versus 12.06 billion estimate. A beat but revenue only by a hair on its chinny, chin, chin. Margins look good so the stock is bouncing a bit, now up one-half percent to 21.20. The guidance will occur on the call and that is what is needed. Chambers is speaking now.
Note Added 2/13/13 at 4:18 PM: Chambers says they have some growth but their peers in the business are having trouble meeting growth. Cloud market is good, mobility good, video good. Europe was a negative contributor but shows some signs of hope, but split into northern Europe which is turning the corner, and southern Europe, which will remain challenged. In the U.S., government work is keeping them busy. Governments must spend on IT to improve efficiency. Plans for their dough is to return some cash to shareholders, diversify into switching mobile, etc.., not just servers anymore, also acquisitions. Future growth will be outside U.S. unless tax policy changes. Customers say the year is off to a slow start but they are looking for steady improvement this year. Europe is steady and if governments do not execute too badly, there will be ups and downs, improvement should occur but at a slow pace. That was a little bit of a tempered response at the end of the discussion after the prior more rosie talk. CSCO is up 1.6% so traders like what they hear. Listen for the guidance from the call.
Note Added 2/13/13 at 4:26 PM: Blink and the markets change. Now traders decided to lead CSCO out to the shed out back and have started to beat it, Cisco is now down 1.3% AH's. Chambers is seen running across the lawn to a waiting car. Perhaps the insider traders were told the guidance?