Computing and printing systems giant Hewlett-Packard (HPQ) — much like many of the other box-makers, such as Dell (DELL) — has seen a dramatic demise in its stock during the past three years.
After peaking in the summer of 2000, the stock came back down to earth with the burst of the Internet bubble, bottoming out in late summer/early fall of 2002. From there — right along with the broader market, and at least partially in thanks to the Greenspan low-interest-rate policy — the stock managed to reinvigorate itself so much so that by October 2007 it had retraced/made up roughly 70% of its selloff from the summer 2000 peak.
Ultimately, the financial crisis weighed on the stock and led to a significant beating of HPQ, but again Hewlett-Packard managed to synch itself with the broader market and began its next bounce in early 2009. This next bounce — which, from this longer-term point of view, might have been the most important one — managed to marginally record a higher high vs. the 2007 highs, but only served as a double top. After a massive selloff from the 2010 highs — which came as a result from the company’s plagues with CEO issues as well as the further commoditization of personal computers — the stock retested its 2002 lows again in November 2012, from where the next bounce occurred.
Not surprisingly, and much in line with what I described above, Hewlett-Packard again bounced off the November 2012 lows with great correlation to the S&P 500. In late May, this latest rally finally brought the stock up to a resistance area that dates back to March 2012, right around the $25.30 area. During the past few weeks now, the stock has been trading in a tight range, right up at the $25.30 resistance area.
If the stock manages to break past this level on a daily closing basis, then given the duration of the resistance area, the odds favor the stock to lift toward the $29 area.
Serge Berger is the head trader and investment strategist for The Steady Trader. Sign up for his free weekly newsletter here.