Short interest in Cisco (CSCO) surged near 52-week highs at the end of August. At the time I noted this move, CSCO had bounced off its 52-week lows, and I suggested it would be a long if it could set a fresh high on the month. CSCO accomplished that move later in the day. I also surmised that a subsequent decline in short interest would confirm the bullish case. As of September 13, short interest in CSCO retreated 10% to 47.4 million shares. I set an upside target at the 50-day moving average (DMA) which was an 8% move. CSCO hit this in just a few days. So far, so good.
However, CSCO has lingered at resistance for over a week, apparently lacking a catalyst to move higher. CSCO’s 10% performance on the month fell short of the NASDAQ’s 12% gain on the month. Moreover, the NASDAQ has cleared important resistance at its June highs whereas CSCO is still struggling to fill its post-earnings gap-down from August. If the general stock market remains bullish, CSCO could continue drifting higher, but it is difficult to make a case for a change in the poor relative performance. So, it makes sense to look elsewhere for bets on tech. (Note well that the market remains very over-bought here: T2108 is sitting at a very lofty 85% now).
*Chart created using TeleChart:
Be careful out there!
Full disclosure: no position