Anytime after the March, 2009 lows, if you had asked me which stock or stocks would break those lows within the next three years, Cisco (CSCO) would have been one of the furthest names from my mind. And yet, Tuesday (Aug 9), CSCO closed just 2% above its closing and intraday March, 2009 low. When CSCO hit its low of the day of $13.30, the stock cracked an 8 1/2 year low.
A lot has been said about how CSCO has suffered company-specific problems. However, after fiber optic networking stocks started selling off with Finisar’s (FNSR) breakdown in March of this year, and then Juniper (JNPR) – one of CSCO’s most successful competitors – dropped 21% in one day in response to earnings, I began to wonder whether CSCO has really been a canary in the coalmine all this time. In fact, JNPR is now at prices last seen in April, 2009, filling a gap up printed at that time. JNPR has lost 52% from its February/March highs. This means in five months JNPR has roughly lost what it took CSCO 16 months to lose.
*All charts created using TeleChart
Time will soon tell whether there is something fundamentally wrong with the entire networking space.
Be careful out there!
Full disclosure: long CSCO