After collapsing nearly 30% between the first week of January and the first week of February, tech giant Qualcomm Inc (NASDAQ: QCOM) is now trading around $145. It’s been a rough start to the year for investors, with that selloff effectively dragging the stock back to 2020 levels.
Though the stock was already under pressure, the primary catalyst for the selloff was the company's weak forward guidance in its first report of the year.
That disappointment accelerated selling pressure in what has long been a frustrating stock for investors to hold, despite its consistent ability to top earnings and revenue expectations.
Off the back of that selloff, Qualcomm’s relative strength index (RSI) reading was pushed toward multi-year lows, sentiment all but collapsed, and many analysts began throwing in the towel.
For a company operating in such a critical part of the semiconductor ecosystem, the capitulation felt definitive. Yet over the past fortnight, something has shifted that’s making investors question whether the worst of the selling is already behind them. Let’s take a closer look.
A MACD Signal That Matters
In mid-February, Qualcomm’s moving average convergence/divergence indicator (MACD) registered a bullish crossover, and it did so while still deeply in negative territory on the indicator. That last detail is crucial, as a bullish MACD crossover above the zero line can simply confirm ongoing strength.
A crossover from below zero, however, tends to suggest that downside momentum has reached an extreme and is beginning to unwind. In other words, it signals the early stages of a potential reversal rather than just continuation.
With the bears firmly in control throughout January and early February, every bounce attempt was quickly sold into, and momentum remained decisively negative. Now, a string of consecutive green sessions suggests short-term control may be starting to tilt back toward the bulls, especially when you factor in the MACD’s bullish crossover.
The last time Qualcomm printed a similar bullish MACD crossover from deep below zero was last April, after the stock had also fallen roughly 30%. That signal marked the low and was followed by a multi-month rally of 70%. For investors who love a comeback story, it's a compelling setup.
Price Action Is Quietly Improving
Importantly, the recent signal is not happening in isolation. Price action is also beginning to cooperate. The bears have been unable to go below the immediate post-earnings low they set, despite all the doom-and-gloom from analysts at the time. Instead, the stock has decidedly turned northward. Now, this doesn’t mean the downtrend is officially broken, but it does mean the relentless pressure has eased.
For a stock that gave up two years of gains in just a matter of weeks, stabilization alone is notable. When a deeply oversold name begins to rally in the wake of bad news rather than sell off further, it often signals that the worst-case scenario is already priced in.
Analysts Are Starting to Shift
The technical improvement is now being accompanied by a subtle change in tone from Wall Street. Earlier this year, many analysts downgraded Qualcomm or cut price targets following its weak guidance.
In line with the stabilizing price action and bullish technical indicators, that wave of caution now appears to be softening.
This week has seen the team at Wells Fargo lift its rating from Underweight to Equal Weight, while Loop Capital went even further, upgrading Qualcomm to a full Buy. They argued that key near-term headwinds are beginning to ease and that the company’s broader diversification strategy is strengthening its longer-term outlook.
Both Loop Capital and Wells Fargo set fresh price targets of $185, implying roughly 30% upside from current levels and adding to the sense that we could be looking at a serious contender for a comeback rally.
What Needs to Happen Next
For this early reversal to evolve into something more durable, Qualcomm needs to consolidate recent gains and begin forming a base around $150.
That level is psychologically important as it’s been a key battleground many times before. If the stock can hold above the recent lows and start carving out higher lows, confidence should begin to rebuild. A decisive break below $130, however, would likely invite renewed selling.
This remains a stock with real headwinds. Handset demand uncertainty has not disappeared, and management still needs to restore credibility around forward growth. But markets often turn before fundamentals visibly improve. The bullish MACD crossover deep below zero suggests that downside momentum may have already peaked.
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The article "Qualcomm’s Sudden Reversal Signal Could Catch the Bears Offside" first appeared on MarketBeat.
