This is my deep analysis of QCOM.
The chart above shows QCOM dating back to the year 2000. This is a weekly interval so each candle represents one week. I wanted to start here to show just how far back QCOM has had a relationship with this price zone. The price zone that I'm talking about is $49.03 - $52.33. This is an important trading zone in QCOM history.
Let's start with $49.03. Why this number? Take a look at this daily chart below. I know the candles are hard to see but really we just want to focus on the highlighted areas.
Look how many times our $49 level is tapped going back ten years! This acts as both a support and a resistance. When WCOM is trading below the $49 level it acts as a resistance. When QCOM is trading above the $49 level it acts as support. Let's tackle the Resistance piece first though. Notice how each time it rejects the price pulls back at least $2.00. In some instances we fall into a bearish period for QCOM. Granted, 2009 wasn't such a great year for any stock.
Now, look at what happens when the price bounces off the $49 level as support. Every time we see the bounce run up to at least $52.00. This is a $3.00 run. However, in most cases the price continues on further. A $3.00 move on a stock in option-land means $$$.
Now, the next price target we're looking at is $50.86. To help us understand this trend line better let's take a look at the 4 hour chart:
As we look at the chart above we can see our $50.86 level a little bit more clear. Look how it's doing the same as the $49 level. It's acting as both a support and resistance level in different periods of time. I've only looked back a couple years for this one but if you do your own DD you can go back ten years for $50.86 as well.
I wanted to make sure and highlight this level because it acts as our first key point once bouncing off the $49.00 level. If we're trading the bounce and we make it past $50.80s history tells us we're likely to be safe to travel up to the $52 level and beyond.
Now, here's the important one. The $52.00 level. I'll use the same 4hr chart to help explain this one as well:
This $52.33 level acts as a key support line for QCOM all across the years. Notice how each time it taps it usually bounces hard. However, for our current situation with QCOM we want to pay closer attention to what happens once it breaks the $52.33 level.
It runs up quick!
This is an option traders wet dream.
So what does all this mean for us right now? Well, it means a couple things. First, the market has been rallying hard lately and because of this we need to be cautious of taking a long call position. Secondly, we need to make sure we time the play correctly. Looking back in the past we're seeing about a month long hold to really capture serious gains. So our options strike and expiration date needs to be at least one month out.
Thanks for reading my deep analysis on QCOM. Are you going to play it? What are your thoughts? Share some great option strikes/dates in the comments!