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Trade the Volatility After Earnings Reports

Stocks in this article: CSX GS IBM INTC JNJ KO PEP AXP

Intel (INTC - Get Report) ($21.79) beat lowered earnings estimates, but issued a warning that sales of personal computers should remain weak this holiday season. The company cut its revenue estimates for the year-end quarter. The stock traded down to $21.27 on Wednesday closing in on my semiannual value level at $21.14. My monthly risky levels is $25.07. The weekly chart is negative but oversold with the stock closing in on its 200-week SMA at $21.18.

Johnson & Johnson (JNJ - Get Report) ($71.00) beat earnings estimates and the stock opened above my quarterly risky level, now a pivot at $68.76. My semiannual value level is $62.14 with monthly and quarterly pivots at $67.56 and $68.76 with annual risky levels at $70.65 and $75.79 where profits should be taken. The high, set in September 2008, is $72.76.

Coca Cola (KO) ($37.74) beat EPS estimates by a penny, but reported that earnings declined nearly 2% from the prior year. Earnings were hurt by the negative impact of currency fluctuations as a stronger dollar hurt their significant overseas business. The stock opened higher on Wednesday to $38.14, but drifted to a day's low at $37.70, staying between my semiannual pivot at $36.63 and my monthly risky level at $41.86. The weekly chart shifts to negative on a close this week below the five-week MMA at $38.20.

UnitedHealth Group (UNH) ($55.99) beat consensus estimates reporting higher revenue due to strong enrollment growth and share buy-backs. The stock opened with a high at $57.70 on Wednesday then drifted to a day's low at $55.65. My semiannual value level is $55.05 with my monthly risky level at $59.61.

Pepsico (PEP) ($70.10) reported that they were adversely affected by currency issues as EPS declined 8% year over year, but EPS was a beat nonetheless. The company also affirmed its 2012 outlook. The stock opened with a day's high at $70.93 then drifted down to a day's low at $69.95. The stock remains between my quarterly value level at $68.44 and my monthly risky level at $72.22. The weekly chart stayed negative with a weekly close below the five-week MMA at $70.80.

American Express (AXP) ($59.37) reported after the close on Wednesday and its third-quarter profit matched analysts' estimates. The stock drifted lower to $59.00 after the company reported that credit card spending growth slowed.

In Thursday's trading activity, investors and traders should buy weakness to my annual pivot at $57.53 or sell strength to my quarterly risky level at $60.57. The weekly chart profile stays positive on a close this week above the five-week modified moving average at $58.15.

At the time of publication, the author held no positions in any of the stocks mentioned.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

Richard Suttmeier has an engineering degree from Georgia Tech and a master of science from Brooklyn Poly. He began his career in the financial services industry in 1972 trading U.S. Treasury securities in the primary dealer community. In 1981 he formed the Government Bond Department at LF Rothschild and helped establish that firm as a primary dealer in 1986. Richard began writing market research in 1984 and held positions as market strategist at firms such as Smith Barney, William R Hough, Joseph Stevens, and Rightside Advisors. He joined www.ValuEngine.com in 2008 producing newsletters covering the U.S. capital markets, and a universe of more than 7,000 stocks. Richard employs a "buy and trade" investment strategy and can be reached at RSuttmeier@Gmail.com.
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