Tech Earnings May Lower Red Flags

Cree(CREE) is expected to report EPS of 27 cents after the close Thursday. Cree makes semiconductor materials and devices, and, according to my model, it's currently 9.7% undervalued. Fair value for the stock as it approaches earnings is $30.18.

On a negative reaction to earnings, a weekly close for Cree below the five-week modified moving average at $27.27 would shift the weekly chart profile to negative. That indicates risk to my monthly support at $22.03. A positive reaction to earnings should result in a trend above a weekly pivot at $27.35, which would target a retest of chart resistance at $30.90.

After Thursday's close, analysts expect Nvidia(NVDA) to report EPS of 34 cents. Nvidia makes graphics processing units (GPUs), media and communications processors (MCPs) and wireless media processors (WMPs) for a variety of computing platforms worldwide. My model shows Nvidia 58.3% undervalued as it heads into earnings. Its weekly chart profile is neutral, with the five-week modified moving average at $27.02. A positive reaction to earnings should lead to a new 52-week high; my quarterly risky level is $31.02, and the current 52-week high is $29.60. On a negative reaction to earnings, a weekly close below $27.02 would indicate risk to the 200-week simple moving average of $24.37, with quarterly support well below that at $21.83.

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