Technical Indicators under Review – Cisco Systems Inc (NASDAQ: CSCO)

U.S. stocks fell on Friday as several banking companies weighed down the major indexes on the final day of an otherwise strong week for equities.

The Dow Jones industrial average fell 122.91 points to close at 24,360.14, with J.P. Morgan Chase as the worst-performing stock in the index. The S&P 500 closed 0.3 percent lower at 2,656.30 as financials dropped 1.6 percent. The Nasdaq composite declined 0.5 percent to 7,106.65. The indexes opened sharply higher on the back of strong earnings from some of the big banks.

Citigroup, Wells Fargo and J.P. Morgan Chase all stated quarterly earnings and revenue that surpassed analyst expectations. Bank shares at first traded higher before falling, as the strong results were already priced in. The SPDR S&P Bank ETF (KBE) fell 1.6 percent, while J.P. Morgan dropped 2.7 percent.

Expectations for this earnings season are high, especially for financials. According to FactSet, S&P 500 earnings are forecast to have grown by 17.1 percent last quarter. Financials, meanwhile, are predictable to see earnings increase by 24 percent. Bank of America, Goldman Sachs and Morgan Stanley are all planned to report next week.

So far, the earnings season is off to a good start, according to Nick Raich, CEO of The Earnings Scout. In a note to clients, he said earnings growth thus far totals 26.8 percent for the first quarter.

Despite Friday’s decline, the major averages posted strong gains for the week. The Dow and S&P 500 rose 1.8 percent and 2 percent this week, respectively, while the Nasdaq advanced 2.8 percent.

In economic news, the University of Michigan’s consumer sentiment index ticked down to 97.8 in April from 101.4 in March. (Source: CNBC)

Hot Stock Analysis: Cisco Systems Inc (NASDAQ: CSCO)

Investors rushed to trade on Cisco Systems Inc (NASDAQ: CSCO) Friday, soon after a drastic change of -0.78% in the share price was observed and the stock become able to close its trade at $43.00. The stock becomes active when traders or investors changed hands with 18,116,280 shares contrast to the three-month volume average of 30.45M shares. The ratio between current volume and 3-month average value, also known as Relative volume was observed at 0.59, validating the stock’s In Play state.

Stock Technical’s & Performances to Explore:

Based on a recent bid, this stock (CSCO) was trading at a distance of -6.85% from 52-week high and 41.63% away from its 52-week low price. We observed 5.57% rate of return for a stock for the last 5-trading days, which was maintained for the month at -5.04%. Likewise, the performance for the quarter was recorded as 7.23% and for the year was 31.82%. The comparison of these above mentioned historical values gives an idea to investor whether the stock is ready to shift trend (up to down or down to up) or how the stock has recovered the losses or shed gains during its historical phase. For example, if stock’s weekly and monthly performances are positive as compared to year and YTD performance percentage also seems to decrease in comparison to the previous year performance, then one can say that the stock is bouncing back and may able to gain more and more in near future and vice versa. Although stock’s historical performances are key to consider, don’t invest (or not invest) based solely on it. It’s just one measure of value. As a serious shareholder, you need to look at plentiful factors that can assist you determine whether any given stock is a good investment.

Simple Moving Averages (SMAs) in Focus:

Moving averages is one of the key indicator and the most powerful tool used by traders. A simple moving average is easy to calculate, which allows it to be employed fairly quickly and easily. A textbook definition of a moving average is an average price for a security using a specified time period. The simplest form of a moving average, appropriately known as a simple moving average (SMA), is calculated by taking the arithmetic mean of a given set of values. For example, to calculate a basic 10-day moving average you would add up the closing prices from the past 10 days and then divide the result by 10. If a trader wishes to see a 50-day average instead, the same type of calculation would be made, but it would include the prices over the past 50 days and the same process goes on for 200 days.

Do SMAs Signal a Trend Reversal?

Based on a recent bid, this stock (CSCO) was trading at a distance of 0.51% from 20 days simple moving average, and its distance from 50 days simple moving average is 0.20% while it has a distance of 17.08% from the 200 days simple moving average. A moving average’s greatest strength is its ability to assist a trader identifies a current trend or spots a possible trend reversal. Moving averages can also identify a level of support or resistance for the security, or act as a simple entry or exit signal.

Stock’s Volatility Analysis:

Volatility is the degree of variation of a trading price series over time as measured by the standard deviation of logarithmic returns. It generally deals with the amount of uncertainty or risk about the size of changes in a security’s value. It can either be calculated by means of the standard deviation or variance between returns from that same security or market index. The Rule of thumb is higher the volatility, the riskier the security. A higher volatility means that a security’s value can potentially be spread out over a larger range of values. This means that the price of the security can change dramatically over a short time period in either direction. A lower volatility means that a security’s value does not fluctuate dramatically, but changes in value at a steady pace over a period of time.

What about CSCO Stock’s Volatility?

According to finviz data, CSCO stock’s volatility for the week is measured at 2.27%, while for the month it is maintained at 2.59%.

An Eye on Beta Factor:

One gauge of the relative volatility of a specific stock to the market is its beta. A beta approximates the overall volatility of a security’s returns against the returns of a relevant benchmark (usually the S&P 500 is used). Presently, Beta factor for CSCO stock stands at 1.14. A beta of 1 indicates that the security’s price moves with the market. A beta of less than 1 means that the security is theoretically less volatile than the market. A beta of greater than 1 indicates that the security’s price is theoretically more volatile than the market. For example, if a stock’s beta is 1.2, it’s theoretically 20% more volatile than the market. Conversely, if an ETF’s beta is 0.65, it is theoretically 35% less volatile than the market. Therefore, the fund’s excess return is predictable to underperform the benchmark by 35% in up markets and outperform by 35% during down markets.

What Do Analysts’ Recommend?

Analysts mean recommendation for the stock is 2.00, (where 1 is Strong Buy and 5 is Strong Sell).

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Steve Backshall

Steve Backshall

I am Steve Backshall and I give an insight into the most recent news hitting the Technology Sector in Wall Street. I have been an independent financial adviser for over 10 years in the city and in recent years turned my experience in finance and passion for journalism into a full time role. I perform analysis of Companies and publicizes valuable information for shareholder community. I am an accomplished journalist who has a passion for travel. My desire to see the world has taken me to countries around the world and given me the opportunity to report for some of the top news organizations.