CSCO shares could be in for a major reversal, as a complex head and shoulders pattern could be seen on its daily time frame. The stock has yet to test the neckline around $27/share before confirming the potential selloff.
Stochastic is pointing down, indicating that selling pressure is present and might be enough to push for a break below the 200 SMA. For now, the short-term 100 SMA is above the 200 SMA, suggesting that the uptrend might resume, but it looks like the moving averages are ready to cross down.
Meanwhile, RSI is on middle ground on its way up, indicating a bit of indecision. This suggests that sideways movement could carry on as investors try to figure out where to take CSCO shares next.
CSCO Shares Forecast
Cisco is set to release its earnings report next week, which explains the current consolidation for CSCO shares. Keep in mind that the network company has seen two consecutive quarters of declining revenue last year before slowly improving. For the second quarter of 2015, the consensus revenue estimate is $12.65 billion, up 2% according to Thomson Reuters.
Analysts expect earnings of 56 cents a share, up 2% from a year ago. It will be the first report with new CEO Chuck Robbins, who officially took over July 26, and his comments could be crucial in setting the tone for stock price action in the coming months. Cisco will likely include updates on cyber-security, its Invicta technology EoL (end of life), sales of its set-top box business to Technicolor, and insight into how it can dominate the Internet of Everything (IOE) era.
Several stock analysts have maintained a buy rating for CSCO shares, as most believe that the company is under good leadership with Robbins and that further upside is possible in the near-term.