Apr 20, 2012

Qualcomm In Seasonal Share Price Pattern

Some stocks tend to move in cyclical patterns. The reason usually is seasonal deviation in earnings for cyclical industries such as raw materials and heavy equipment, consumer cyclical. Setting aside fundamentals and close observation of the long term historical charts could spot the same conclusion for the repeated patterns. However spotting repeating share price movement could benefit investor with lower risk investment.

I have observed 8 year historical chart of the technological company Qualcomm. Share price peaks and bottoms tend to repeat each year in interesting pattern. The price registers its max in the first half of the year, usually during spring time, followed by sharp drop. The bottom in most of the cases in the eight year period of observation is in summer months - 75% (6 out of 8 years). That is because of the two exceptional years that have brought markets to extreme conditions: 2008 – the crisis burst year and following stimulus driven 2009.
Qualcomm seasonal share price pattern
Qualcomm seasonal pattern

On the chart light red shaded areas show the time period of each bear move for Qualcomm shares from the beginning of the year to the year bottom. As you can see for all years first half is in red. Now if we follow the pattern logic for current 2012 we could expect that next stock direction is south. That might be the case as the price has already formed its peak at $68.80 and started declining. If the slide continues the pattern could repeat itself again this year and next target for QCOM would be around $50.

More on seasonal trading: 
Google Seasonal Trading

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