Catching A Falling Knife?

Since January 27th, Qualcomm Inc. has plummeted from $47.31 to $35.46. This is a drop of almost 25% in just over a month. Qualcomm Inc. specializes in the development, design, manufacture and marketing of digital wireless telecommunications.

With the smart device revolution going on and 3G technology becoming as necessary as oxygen to the consumer, it’s hard to believe one of the biggest chip makers would be getting hammered. However, today with the NASDAQ up 1.58%, QCOM sold off 3.06% and was a great short all day, closing on its lows.

So when is it safe to catch a falling knife? Maybe tomorrow? After the close the company raised its dividend 12% to 19 cents a share and announced a new $3 billion stock buyback program. After market the stock is up 2.59% to $36.42.

The question remains if this will be enough of a boost to bring in buyer’s to form support? Will QCOM finally start to participate in this tech rally that today saw SNDK rise 11.94% and WDC up 4.79%?

True confirmation that it has reached a bottom will be found if it closes above it’s 2/18 highs of $39.94. Now it’s going to be volatile and may still have room to go down, so be careful on the long side.

If this level fails to provide support, the next level QCOM would likely find support is the low of $32.67 made on 3/6/2009.