"Investment by emotion is rash."

-- Christina Nikolov

Date: January 13, 2003

Opinion: Bearish

Current Price: $14.95

Target Price: $11.83

Commentary:

Since bottoming at $8.12 on October 8th, Cisco Systems (CSCO) soared almost 91%. Now that CSCO is revisiting its December 2, 2002 peak, a double top appears likely. (chart #1)

Support can be found at the base of the double top, near $12.90. Below that, there is additional support between $11.83 and $12.25. (chart #1) On the flipside, there is critical overhead resistance near $15.50, as well as the range between $17.49 and $18.27. (chart #1)

Based on the stochastic oscillator, CSCO is dangerously overbought on a daily, weekly and monthly basis. The last time the stochastic oscillator was this overextended on the monthly chart was March 2000, right as the shares peaked. (chart #2)

To profit from an anticipated decline, we suggest the April 15 put (Symbol: CYQPC), which is currently offered at 1.45.



Chart(s):

1) Cisco Systems (CSCO) Six Month Daily Chart

Click the Chart for an Enlarged View

2) Cisco Systems (CSCO) Three Year Monthly Chart

Click the Chart for an Enlarged View