After staying quite for a long time Cisco Systems, Inc. (NASDAQ:CSCO) shares have recently been behaving interestingly to keep investors awake. It is widely believed that a stock’s future performance can best be predicted by analyzing prior trends and patterns in price. In the case of CSCO, the chart has some interesting things to say about where the stock might be headed in the future.How has the stock performed recently?
Cisco Systems, Inc. (NASDAQ:CSCO) has been trading in a bullish manner, based on the relative positions of the stock’s 20 and 200 day moving averages. In the last month, the price of CSCO has decreased -0.66%. Shares are now up over the past year, outperforming the broad market by -100% and outperformed a peer group of similar companies by 519%. After the latest session, which saw the stock close at a price of $40.60, CSCO sits below its 52-week high.Momentum indicators
Of course, these surface-level price movements don’t tell us much about the direction that CSCO may be headed in the future. In order to predict this, technical analysts look at momentum indicators, which measure the speed and magnitude of these price movements. The idea is that as momentum slows, it may signal the approach of key support or resistance levels and a reversal of recent trends. Two such indicators are the RSI (Relative Strength Index) and the Stochastic %k Oscillator, which fluctuate on a scale of 0 to 100. A reading above 70 indicates that a stock is overvalued, and a reading below 30 implies that it is undervalued. The 20-day RSI for CSCO is 53.34%, which suggests that the stock is not particularly expensive or cheap, and not predisposed to a reactive price movement based on this measure. The 20-day Stochastic %k measure, which sits at 40.56%, tells a similar story, and suggests that CSCO currently trades in neutral territory.What do the trading volumes reveal?
Volume patterns are useful for gauging the level of conviction behind price changes, and can be used to make predictions about future price movements. A sudden increase in a stock’s activity can be a sign that investors are trading in anticipation of a catalyst, or that investors feel very strongly in one way or the other about the future direction of a stock. Cisco Systems, Inc. (CSCO) average trading volume of 31,649,475 during the past month is 46.13% above its average volume over the past year, indicating that investors have been more active than usual in the stock in recent times.
CSCO is currently undervalued by -2.64% relative to the average 1-year price target of $41.70 taken from a group of Wall Street Analysts. The average investment recommendation on a scale of 1 to 5 (1 being a strong buy, 3 a hold, and 5 a sell) is 2.10, which implies that analysts are generally neutral in their outlook for CSCO over the next year.How risky is the stock?
In order to put CSCO’s recent price performance into context, we need to get a sense of how the stock moves in relation to the overall market. Beta, which measures a stock’s price volatility relative to the market, provides the cleanest measure of systematic risk for a stock.
Cisco Systems, Inc. (NASDAQ:CSCO) has a beta of 1.16, compared to a beta of 1 for the market, which implies that the stock’s price movements are more extreme than the market as a whole. CSCO therefore has an above average level of market risk. During the past couple of weeks, CSCO average daily volatility was 37.73%, which is -17.19 percentage points higher than the average volatility over the past 100 days.