(Note: The author of this fundamental analysis is a financial writer and portfolio manager.)

Cisco Inc. (CSCO) shares are trading at levels not seen in nearly two decades. The technology giant closed at $35.88 a share on Thursday, up 5.19%.

The jump comes after the company's fiscal first-quarter results beat analyst expectations by $0.02, coming in at $0.60. At almost $36, the stock has cleared a major technical hurdle, one that is likely to send shares 23 percent higher, to roughly $45.

Meanwhile, the options market expects a further increase in the stock, with some bullish bets taking place (See also: Cisco Stock Soars After Q1 Beat and Solid Guidance.)

As the chart below shows, the resistance level dates back so far that it can only be viewed on a weekly chart, a method that is not used very often. The breakout can be seen in the chart below, with the stock rising above $34.50. There are also little to no hurdles in front of the stock over the near term until it gets to $45. Cisco stock has been trending higher since the middle of 2016. 

 

 

 

Clear Path to $45

The daily chart from 2000 and 2001 show there was a definite support level between $35 and $45 in which the stock consolidated before breaking lower. At the time, $45 was acting as resistance, and $35 was serving as support.

Now that the stock has risen to nearly $36, the $35 level will again act as support, while $45 will act as resistance. There is little if any resistance other than that at $45, which is the only thing standing in the way of the stock ultimately rising. 

Options Trading 

The options market is betting that CSCO shares will rise as well, with nearly 7,000 calls trading at the $38 strike price for expiration on February 16. The options are trading at about $0.61, which implies a breakeven price of $38.60.

It is a bullish bet that shares of Cisco will continue to rise in the coming months ahead. 

(Interactive Brokers)

Cisco stock had a tough time over the years trying to gather the momentum needed to break out. But with the stock increasing once again, it is showing renewed signs of life. The stock should continue to climb in the interim, with a solid support level at $34.50 and a rising trend line to fall back on. 

 

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 holdingsInformation 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.

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