Cisco (CSCO) is acting like it is building a base after a relentless corrective period. Let's notice that CSCO's early strength popped above its nearest-term resistance line and last week's rally peak at 16.51, on the way to this morning's recovery rally peak at 16.72.

Since then, however, CSCO has pulled back to 16.52 to retest the upside breakout level, which needs to contain the intraday weakness to preserve the bullish near-term pattern that has been carved out off of its May 25 low at 15.99.

The ability of CSCO to sustain 16.50, especially on a closing basis, will represent an important near-term sign that CSCO has established a significant year-long corrective low (15.99) and is in a base-building stage ahead of a climb to 18.00.

 

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