Shares of Cisco Systems (CSCO) are under considerable pressure here on Thursday morning, adding further to the market pressure of the last few days. Cisco after Wednesday's close issued disappointing forward guidance after reporting a mixed bag for its April quarter. While earnings per share for its April quarter came in $0.01 better than expected, Cisco's revenue was essentially flat year over year at $12.84 billion, well below the $13.34 billion consensus. The company shared that while its sees solid demand for its technologies, as evidenced by its $15 billion product backlog, supply disruptions that are expected to continue through its current July quarter are leading to a severe shortage of critical components.

To be blunt, we shared with members the strong possibility that Cisco would be impacted by the economic pause in China, but it was much worse than expected. We continue to see the risks and challenges associated with that re-opening as well as with larger China issues -- namely, the ramp-up of manufacturing capacity and port congestion that will rattle supply chains.

Cisco cut its July revenue outlook to a range of $12.4 billion to $13.0 billion versus the $13.87 billion consensus and EPS for the quarter in the range of $0.76 to $0.84 vs. the $0.92 consensus. In all likelihood, however, we could see the supply chain and margin pressures continue well into Cisco's October quarter. There is also the matter that when CSCO shares start trading today, they will breach the $46.50 level of support we identified in last week's Roundup.

The net result is we see a tough slog ahead for CSCO shares, and the reality is we are seeing the share prices for much better-positioned companies hit levels that are far more attractive; we just need for the market to find some solid footing. As we've shared before, the timing on that will hinge not only on the Russia-Ukraine war, which is helping stoke inflation, but also the Fed's inflation-fighting efforts. Until we see inflation data retreat in a meaningful way, per Fed Chairman Powell, the Fed could tighten monetary policy in a more pronounced way.

The above is leading us to exit CSCO shares when the market opens, but to also add some additional layers of market-hedging protection as the ripple effects of Cisco's guidance will hit a smattering of companies, including networking ones such as Ciena (CIEN) , Juniper Networks (JNPR) , Extreme Networks (EXTR) and Nokia (NOK) . In other words, there likely is more downside for tech stocks ahead as expectations once again are recalibrated lower.

While our benchmark is the S&P 500, members probably have noticed the over-weighting of technology in the portfolio, a driving force behind our performance year to date given the year-to-date decline in not only the Nasdaq Composite Index but also the Nasdaq 100. In addition to some technical headwinds, should the Fed adopt a more aggressive rate-hiking strategy, we could see further downside for technology and growth stocks emerge. Better to add some insurance just in case.

We will have more specifics on these actions when the market opens later this morning.

Note: With Chris under the weather and Bob on the road, there will no AAP Daily Rundown today. We apologize for the inconvenience and will be back with the Rundown on Monday, May 23.

At the time of publication, Action Alerts PLUS was long CSCO.