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Cisco (CSCO) : Taking a bearish view

Generally, when I have a bullish Tenkan sen Kijun sen cross, I would have follow my chart and trade accordingly.

However, CSCO chart is showing 2 possible trends at the same time.

From the chart, we can see the following :

1. As shown in the yellow highlighted area, there is a Tenkan sen – Kijun sen bullish cross on Feb 18 just below the kumo.

2. This signifies a weak bullish signal.

3. The price today is trading right at on top of the kumo and we can see that there is a resistance at 24.40

4. So, we could either bet that the bullish trend will continue or we can bet that it will not.

5. In my case, my bet is that it will not break 24.40 . This is further supported from the fact stochastic is showing overbought signals for CSCO.

6. Also, on the business front, Cisco will not be renewing their partnership with HP come this April. And HP was reported to be brining in US$1B business for CSCO. Somewhere, someone from CSCO needs to be able to fill this gap.

7. I don’t think Cisco transformation will be completed this year. It will take another 2-3 years before the entire company is aligned.