(Note: The author of this fundamental analysis is a financial writer and portfolio manager..)
Shares of Cisco Systems Inc. (CSCO), Activision Blizzard Inc. (ATVI) and PayPal Holdings (PYPL) are all trading well off their 2018 highs, down by 8.5% or more. But there may be even more losses for these three technology stocks in the coming weeks, based on technical analysis of three charts.
The Technology Select Sector SPDR ETF (XLK) has fallen about 7.8% from its highs in 2018, while shares of Cisco have dropped by about 8.5%. But the losses in both PayPal and Activision have been steeper, with PayPal down by over 11%, and Activision down by 15%.
Cisco's could fall nearly 8% from its current price around $41.5 to $38.40, giving it a loss from its intraday high of $46.16 on March 13 of almost 17%. The technical chart shows that the stock broke through support at $42.15, and has been unable to climb back above resistance on two failed attempts. Additionally, the relative strength index (RSI) is currently around 40 and would need to fall below 30 to reach oversold conditions. The trend of RSI would also suggest the stock has more downside risk as well. (For more, see also: Cisco Stock: Price Levels to Watch After Earnings.)
PayPal may fall by nearly 11% from its current price around $75.60 to $67.40. It would be a drop of almost 22% from its intraday high on January 31 of $86.32. The stock has been trending lower recently, and failed on multiple attempts to rise above the downtrend. Should the stock fall below $74, the next level of support would come at $67.40. Additionally, the RSI for PayPal is also around 40 and has yet to reach oversold conditions below 30.
Activision Blizzard could fall by nearly 14% from its current price around $66.25, a decline of almost 28% from its intraday high of $79.63 on March 12. The stock has fallen below support at $66.50 and has failed on multiple times to rise back above it. The level of support comes in the range around $57.20 to $59.80. Like the others, the stock's RSI is currently around 40 as well and would need to fall below 30 to reach oversold levels. (For more, see also: Is Activision Overbought at These Levels?)
With earnings season quickly approaching strong results could soon change the direction of the chart, giving them a more favorable direction. But for now, each of these three stocks has technical charts that are suggesting lower stock prices lie ahead.
Michael Kramer is the Founder of Mott Capital Management LLC, a registered investment adviser, and the manager of the company's actively managed, long-only Thematic Growth Portfolio. Kramer typically buys and holds stocks for a duration of three to five years. Click here for Kramer's bio and his portfolio's holdings. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Past performance is not indicative of future performance.