Technical Indicators: Are Qualcomm Investors Bullish or Bearish?
Qualcomm’s stock price movement
Qualcomm (QCOM) stock fell 20% between January and April 2017 after rising more than 42% in 2016. The fall came as regulatory and legal hurdles, especially from Apple (AAPL), started affecting its earnings. The company has increased its dividend by 7.5%, but this doesn’t seem to have raised optimism among investors.
However, there was increased optimism among investors in May 2017 after the company launched its Snapdragon 600 series and its Snapdragon 835 witnessed strong demand. Let’s see what a technical analysis says about investors’ sentiments toward Qualcomm.
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50-day and 100-day moving averages
After falling more than 20% in the first four months of 2017, Qualcomm’s stock price has risen over the past few days to reach $56. It’s currently trading at par with its 50-day moving average of $56 but below its 100-day moving average of $57.
On the other hand, NXP Semiconductors (NXPI) is trading at $107.27, above its 50-day and 100-day moving averages of $105 and $102, respectively. Broadcom (AVGO) is trading at $237.66, well above its 50-day moving average of $222 and its 100-day moving average of $210.
The RSI (relative strength index) is a technical indicator that measures the intensity of investors’ sentiments on a stock. The RSI is measured on a scale of zero to 100, with less than 30 indicating that a stock has been oversold and more than 70 indicating that a stock has been overbought.
On May 18, 2017, Qualcomm’s 14-day RSI was 69. Over the past week, the stock’s RSI has fallen from over 70 to under 70. The stock’s price rose 2.6% between May 11 and 18, 2017. On May 18, NXPI’s RSI was 71, and Broadcom’s RSI was 70. Overall, there’s strong optimism in the communications semiconductor market.
A stock’s being overbought indicates a potential downturn. Hence, analysts have consensus “hold” recommendations for QCOM and NXP. Even though Broadcom has been overbought and is trading well above its 50-day and 100-day moving averages, analysts are optimistic about the stock and have given it a strong consensus “buy” recommendation.
Next, we’ll see whether QCOM’s stock price justifies its fundamental valuation.