Qualcomm has not reached its $100 stock price high since the late 90s. Since then, Qualcomm’s price action has been in a series of multi-year ranges, overlapping structures, and powerful uptrends that get sharply interrupted, which makes charting its structure not as straight forward as other stocks.
However, with 30 years of price action, I believe we will see a pullback, followed with a renewed uptrend that should take QCOM to all-time highs for the first time in 20 years.
Elliott Wave Count – Game Plan
The above chart is a snapshot of Qualcomm’s price action trading from 2015 until now. We are currently in a larger degree, primary wave-3, which is highlighted in blue. This wave will take years to play out, and will see a number of corrections along the way.
Remember, each wave is comprised of its own internal waves and is part of a larger wave. So, if we go one degree lower in time, what’s evident is that the primary wave-3 in blue is unfolding in a leading diagonal pattern. We are currently on the 3rd wave of 5 within this leading diagonal, which is highlighted in green. The evidence supports that we should expect a B wave correction soon.
Recently, the price of Qualcomm was met with a very tight cluster of Fibonacci levels, which are derived from multiple timeframes, and instantly reversed. This would put us in the beginning stages of the B-wave retrace, and the likely targets are in the green box. These price levels are comprised of retrace levels that will act as likely support and reversals in the coming correction.
Based on how dislocated semiconductor valuations got from their price, I will be targeting the lower end of the green box, which has another confluence of Fibonacci price clusters.
Internals and Trendlines Support Correction
If we look at the trendlines and internals of Qualcomm, it supports the correction scenario outlined above. First off, the RSI is showing negative divergence – the RSI is making lower highs while the price of QCOM makes higher highs.
This is always a caution sign and signals a drawdown of some extent, but it’s also worth noting that QCOM is also in overbought levels, further supporting the need for a momentum reset.
Next, it’s worth noting the 2 uptrends, which are highlighted with the blue dashed lines. Below each uptrend, the MACD moves along its own trendline. When the MACD is trending along with the price, it’s the sign of a healthy uptrend.
The MACD uptrend can also act as a warning of a large drawdown as well. Notice when the MACD and the price both broke their trends and how much downside that followed. I’m not expecting a drawdown of the magnitude we saw in late 2018; but, I am expecting a healthy correction.
The MACD also rolled over and is heading back towards the trend line. Once these trendlines break, the green target box will be in play, and I will be looking to make a position. For anyone that does not want to time their entries and wants to buy today, a suggested stop would be at $61.
However, I believe we will see a pullback into the region between $80 on the shallow end – and $60 on the more severe end. There is a large number of price clusters around the mid to low $60, and I would be a buyer around this price region.