Cisco Systems, (CSCO) is a communications and information technology company that deals in the design, manufacturing, and sale of internet connectivity devices. (CSCO) is currently trading at $22.92 and is in a fifty two week range between $20.22-26.49. Cisco systems is up 2.05% YTD and is only slightly under performing the broader market. If we look at Cisco using the Ichimoku cloud on the daily chart, Cisco has been trading in or below the cloud this year during the first quarter. Cisco has only broken the cloud to the upside for brief periods of time before selling off back into or below the cloud. Cisco is currently trading above the cloud; however the chart is very weak and does not give any bullish signals.If we take a look at Cisco’s past earnings performance it has sold off the last three quarters on earnings announcements. In the third and fourth quarter last year Cisco sold off -7.2% and -11% respectively. Last quarter the stock only sold off -2.5%. The average move over the past two years on Cisco earnings has been a 7.4% move. I believe Cisco is setting up for a short on earnings. The stock has been weak this year trading below the cloud and it has not been able to provide a positive earnings announcement in recent quarters.
Trade: Sell May 23 24 bear call spread for .45 cents
Risk: 55
Reward: 45
Breakeven: 23.45