Purely from a technical perspective, we can make the case that with the series of higher-highs and higher lows since the August 31 low at 19.82, Cisco (CSCO) is in the process of completing a pullback from Friday's recovery high at 22.25 (into today's low at 21.86). If accurate that means that the rally off of this morning's low is the start of a new upleg that should hurdle 22.25 on the way to 22.50 next.

Furthermore, if we incorporate the action from mid-August into our analysis, then the larger picture has the look of a 6 week accumulation pattern that has the potential to propel CSCO into the 23.50/80 target zone, provided the price structure hurdles and sustains above 22.50. At this juncture, only a reversal of today's rally from 21.86 to 22.13 and a plunge beneath 21.70 will compromise the timing to the anticipated upside breakout above 21.50.

 

Mike Paulenoff is a 26-year veteran of the financial markets and author of MPTrader.com.