Qualcomm - QCOM - close: 40.37 change: -0.84 - stop: 38.49
Tuesday, China's Ministry of Information Industry, the country's telecoms regulator, announced that 3G licenses should be available by the end of the year. Presumably, the Ministry will first decide whether it will use the European standard advanced by QCOM or a Chinese-developed standard. The Ministry has not always been clear about its plans. In addition, Lehman lowered the telecom sector to marketweight in their Strategy Growth Portfolio.
QCOM dipped on larger-than-average daily volume Tuesday although the NWX, the networking index, and the XTC, the North American Telecommunications Index, both gained. Wednesday repeated the pattern with QCOM printing an ominous bearish engulfing candle not matched by the bullish patterns on those two indices.
We think QCOM pulls back to establish recent resistance as new support, a normal occurrence. QCOM is likely to find that support at the confluence of the rising 10-dma and the neckline of its inverse H&S, with those levels of support converging near the psychologically important $40.00. If that level does not hold as support, next support is offered by historical support/resistance and the rising 21-dma near $38.50. We've placed our stop just below this second tier of support. New entries could be found on a bounce from anywhere above $40.00. If momentum entries are sought, look for a break above this week's high.
Annotated Chart for QCOM:
Picked on Aug 27 at 41.00
Change since picked: -0.63
Earnings Date: 07/23/03 (confirmed)
Average Daily Volume: 10 million
Link to Current Quote QCOM