Qualcomm Incorporated (QCOM​) is one of the five largest components of the iShares PHLX Semiconductor ETF (SOXX), but it is also the laggard. The semiconductor index has a gain of 39.7% year to date, while Qualcomm stock is down 19.8%. The stock is in bear market territory at 25.6% below its post-election high of $70.24 set on Dec. 13. Qualcomm had been in recovery mode, but with the news that Apple Inc. (AAPL) will be ending its use of Qualcomm's mobile chipset, the stock is up only 6.8% since setting its post-election low of $48.92 on Sept. 8.

The semiconductor giant is expected to post earnings of 81 cents per share when it reports results after the closing bell on Nov. 1. The stock is relatively cheap fundamentally, with a P/E ratio of 20.91 and a dividend yield of 4.20%. (See also: Apple's Hardware Partnership With Qualcomm Is Unraveling.)

Qualcomm has had a tough year given stiff competition in the mobile chipset market. Intel Corporation (INTC), its closest competitor, has been upgrading its chipsets, and its stock ended last week in bull market territory, up 22.4% year to date and up 33.2% from its post-election low of $33.34 set on June 29. If Qualcomm retains leadership in the global wireless chipset market, perhaps the divorce from Apple may be priced into today's pullback.

The daily chart for Qualcomm shows that the stock had been below its 200-day simple moving average (SMA) since Jan. 23, when the average was $60.74. Strength on Monday saw the stock testing and failing its 200-day SMA at $54.77.

The weekly chart for Qualcomm

Technical chart showing the performance of Qualcomm Incorporated (QCOM) stockCourtesy of MetaStock Xenith

The weekly chart for Qualcomm ended last week positive, but today's weakness has the stock below its five-week modified moving average of $52.40. The stock is below its 200-week simple moving average or the "reversion to the mean" at $63.10, last tested during the week of Jan. 20, when the average was $65.72. The 12 x 3 x 3 weekly slow stochastic reading is projected to rise to 57.08 this week, up from 54.29 on Oct. 27.    

Given this chart, my trading strategy is to reduce holdings on strength to my semiannual and quarterly risky levels of $56.54 and $58.54, respectively. I show a weekly pivot of $52.89. (For more, see: Qualcomm's Bid for NXP Still Lacks Investor Support.)

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