Qualcomm (NASDAQ:) will release its first quarter 2022 earnings on Wednesday after the closing bell.
Analysts expect the San Diego-based chip maker to report revenue of $10.44 billion and EPS of $3, up from $8.26 billion and $2.17, respectively, in the corresponding quarter a year earlier.
The strong sales growth is expected to be driven by strong demand for its 5G chips and its latest 5G mobile platform offering, which it launched during the quarter.
So the fundamentals look strong, but what about the supply and demand conditions?
After trading in a range, the price peaked and is now testing the low end of the broken range again. At the same time, it dropped below 50 DMA. The price bounced off the 100 DMA and is now between the means of the two time frames.
On the other hand, the range was less than two months long, making it insignificant in the long run. In addition, momentum indicators, such as the ROC and RSI, are bending upward after near-oversold conditions. The same goes for the MACD, which compares price averages from different periods. The indicator's short MA is aimed at crossing the long MA. When that happens, the hand gives a buy signal, as current pricing becomes stronger than long-term.
Finally, the long-term trend is still up as peaks and troughs have risen on the weekly chart. However, traders can trade the short-term downtrend as marked by the daily highs and lows. characterized by a downward trend of peaks and troughs.
Mean traders will sell if the price encounters resistance near the trendline that marks the bottom of the range.
Aggressive traders can go short once their trading plan takes into account their budget, timing and temperament. Why would the stock fall when fundamentals are positive? Perhaps the recent business developments have already been priced in and some traders are looking to cash out. Here is a simple example showing the essential components of a coherent trading plan:
Trade example – Aggressive short
Entry: $175
Stop Loss: $180
Risk: $5
Target: $160
Reward: $15
Risk-Reward Ratio: 1:3
