Qualcomm Inc (QCOM)

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Sometimes Fundamentals DO Make A Change
By: Julius de Kempenaer | April 25, 2019



In the case of QCOM, it is clearly the settlement on the royalty dispute with AAPL. I am by no means a fundamental analyst but from what I understood this was something that was overshadowing QCOM's performance for quite some time already. The fact that this issue is now gone makes a big difference and the market is acknowledging that.

Reason enough to start digging and look beyond the last 12 months of price performance and pull up some longer term charts. The monthly chart printed above this article caught my eye.

At first sight, the recent jump in price from $ 58 to $ 86 looks like a very steep move and probably too late to jump on board.

A Different View

The monthly chart, using a log scale, tells a different story.

What we see here is a break to the highest level in 20 years in a very convincing way. The month is not over yet but a drop back below that breakout area between $ 70-75 seems very unlikely (but keep that in the back of your head nevertheless).

This former barrier of steel that acted as resistance for 20 years will now very likely come back as support in case of declines and with virtually no overhead resistance and the downside well protected it makes QCOM very attractive from a technical point of view.

The last time QCOM rose to new all-time-highs was at the start of 1999... Just saying ;)

The relative strength of QCOM vs XLK reached its high in 2009 and after some sideways movement, really started to decline from 2014 onwards. That decline recently ended when the RS-Line completed a double bottom and broke its previous high for the first time since 2009 while at the same time taking out the falling resistance line.

And this relative strength line is nowhere near all-time highs yet!

From a relative perspective, the party has only just begun.

From a trading perspective, you may want to wait for a throwback towards the new support area to optimize the entry or split positions in half or thirds and buy 1 part at the market and the remaining part(s) at lower levels if possible.

Julius de Kempenaer
Senior Technical Analyst, StockCharts.com
Creator, Relative Rotation Graphs
Founder, RRG Research

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