How to trade Qualcomm shares in a pandemic

<p>Coronavirus is a big deal on more than a few levels. But the even bigger deal for the Qualcomm (NASDAQ: QCOM) stock is critical support found in the price chart. And while investors do not have to be as fast as the speed of light, it’s time to put QCOM shares on the radar to buy. Let me explain.

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As all investors with a passing interest in the stock market are aware, as well as non-investors for that matter, it has been historically ugly weeks on Wall Street.

Of course, all fingers have been pointed at the coronavirus pandemic, as the large averages quickly fell from the high peaks of February to a full-fledged, very grizzly bear market. And not surprisingly, the Qualcomm share has not been shown to be immune to the fallout.

At its worst, the correction has dropped almost 36% from the wide SP 500 with large capacity. The technically heavy NASDAQ has cratered slightly less. Nevertheless, its decline of about 33% has also slightly obscured the 20% gateway to the bear market area.

At the same time, Qualcomm’s shares have fallen as much as 39%. But rather than being afraid, it is now time for investors to be optimistic and act opportunistically. In short, catalysts outside and on the QCOM price chart strongly point to the chance of picking up stocks for a very favorable discount.

That’s right, investors should consider buying Qualcomm shares and not sell.

Good basic and 5G tailwind

In terms of business, Qualcomm is in a strong position to take advantage of last year’s launch and continued rollout of the global 5G network despite coronavirus. While the United States does not yet feel the worst of the pandemic’s impact socially and economically, China and the rest of Asia are already “coming back online” after their COVID-19 outbreak. It’s important, but it’s not everything.

The second fact is that Asian markets have been powerful users of 5G. Investors can expect so much that the company’s licensing and chip business will grow strongly as these economies continue to put the proverbial “open to business” signs on the front door again. In addition, it is not difficult to realize that in the wake of the corona virus, there will be an even stronger secular trend towards increased use of mobile devices and in turn a more robust growth for Qualcomm.

Now that Qualcomm is trading at a much more reasonable valuation, room for upgrades given the stock‘s rather large “hold” recommendation of 43% and a price chart that can “level out” game conditions for investors, it’s time to consider stocks for a place in the portfolio.

Qualcomm Stock Weekly Chart

Source: Chart of TradingView

On the price chart, the aggressive correction of the Qualcomm share has landed shares in a test of stock price support. Specifically, four ‘levels’ of key Fibonacci support dating as far back as 2002 have been challenged by the downturn. A cluster of so many Fibonacci levels is definitely convincing. In our opinion, it is a gift without being a sucker. But there is more to QCOM as well.

Despite the larger percentage decline in relation to the broader averages, Qualcomm is also in an upward trend. Equities are far north of the lowest formed during the most recent significant market correction at the end of 2018. The same cannot be said for either NASDAQ or the S&P 500. And according to our observation, this is another sign pointing to relative strength and market development in the coming months. .

To be clear and get an extreme rally from the broader averages, I do not mean that investors have to be as fast as the speed of light or 5G when they press the buy button on QCOM. At this point, I would actually suggest waiting for a powerful market-based follow-up day to emerge in the coming days. In our opinion, an FTD is more important for the market and the fate of the Qualcomm share than coronavirus, FTC or Apple (NASDAQ: AAPL) for that matter.

Disclosures: Investment accounts managed by Christopher Tyler do not currently hold any positions in any of the securities mentioned in this article. The information provided is based on Christopher Tyler’s observations and is intended for educational purposes only; whose use is the responsibility of the individual. For additional options-based strategies, related considerations or to ask a question, you can find and follow Chris on Twitter @Options_CAT and StockTwits.