• From the chart, Microsoft is still sitting on the lower band of its long term downtrend channel. It has rebounded from a low of US$14.87 to current levels to retest the middle band resistance at US$17.20. Its 30-day SMA at US$17.22 is also standing in the way of the bulls. A breakout would be bullish for the stock and a retest of the upper resistance at US$20.20 is likely in the medium term.
• Technical indicators are showing signs of bullishness, supporting the change in momentum towards the bulls. However, its very short term indicators are overbought, suggesting that a pullback is likely.
• Aggressive investors looking to buy may want to wait for a pullback to S$16.18 or S$15.50 to buy. Cut losses if prices falls back below the Mar lows of S$14.87.
3M (MMM US; US$45.93) – SELL
• The stock rebounded sharply from a low of US$40.88 and tested the breakdown level of US$50.00. However, it failed to break back above the said resistance. The stock is likely to undergo a minor correction in order to regain the buying momentum.
• Indicators are marginally positive but losing momentum. Its MACD and RSI are starting to turn lower.
• There is a strong possibility that the stock could ease to US$42.96-44.26 next with a possibility of falling back to its low of US$40.88. Sell on upticks towards the US$50.00. Only a breakout above US$50.00-51.00 levels would see a change in trend.
Cisco Systems INC (CSCO US; US$15.91) – BUY
• Cisco’s strong rebound has pushed the stock past its downtrend channel resistance at US$15.94 recently but the buying began losing momentum. It closed back below its downtrend channel resistance. The stock needs to recover above this resistance to test the next resistance at US$18.00 and US$20.30 in the medium term.
• For now, its longer term indicators are starting to improve. It may be best to buy on weakness here. It daily indicators show a loss of momentum for the buyers, suggesting further retracement is likely.
• Buyers looking to buy Cisco may want to wait a while before buying. The 50% FR retracement from a low of US$13.61 to a high of US$16.94 is US$15.27 while its 62% FR is at US$14.88. Its 30-day SMA is at US$15.32. So, buying in a cluster of support at around these US$14.88-15.30 levels is a low risk buy. However, put a stop at US$13.55 just in case things turn out badly.
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