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Cisco to the Woodshed, NetEase to the Moon After Earnings

NEW YORK ( TheStreet) -- I have been previewing earnings reports for many companies this earnings season. Then a few days later, I follow up on how these stocks performed in reaction to earnings beats and misses, with an eye on revenue and guidance. The purpose of this coverage is to help buy-and-trade investors capture some of the stock specific volatility both before a company reports earnings, and in reaction to these reports.

On Aug. 12 I wrote Cisco and Buy-Rated Retailers Headline Earnings and four of the six companies previewed beat earnings per share estimates. Even so, three traded lower after earnings, two moved sideways and one became a momentum stock.

This morning the stock market remains under a ValuEngine valuation warning with 75.1% of all stock overvalued 42.2% by 20% or more, 15 of 16 sectors overvalued, 13 by double-digit percentages, seven by more than 20%.

The technicals for the major equity averages are a mixed bag. The weekly chart profiles are negative for Dow Industrials, the S&P 500 and Dow Transports, but the Nasdaq and Russell 2000 still have overbought weekly charts.
[Read: <a target="blank" data-add-tracking="true" href="http://www.thestreet.com/story/12015224/1/apple-google-netflix-the-olympics-and-the-nfl.html"><em>Apple, Google, Netflix, the Olympics and the NFL</em></a>]

Tech bellwether Cisco Systems (CSCO - Get Report) ($24.07 vs. $26.05 on Aug. 9) reported a beat of 2 cents a share in afterhours trading on Aug. 14 earning 49 cents. The stock was sent to the woodshed the next morning and continued to move sideways to down to a low of $24.05 yesterday. Poor guidance and a 5% cut in the workforce, or 4,000 employees, was the catalyst for the stock price decline. Cisco continues to have a hold rating according to www.ValuEngine.com with the stock declining below my quarterly value level, now a pivot at $24.44. My annual value level is $22.76 with this week's risky level at $25.95.
[Read: <a target="blank" data-add-tracking="true" href="http://www.mainstreet.com/article/career/why-uneducated-are-making-more-you"><em>Why the Uneducated Are Making More than You</em></a>]

Mall department store Dillard's (DDS - Get Report) ($78.52 vs. $80.14 on Aug. 9) beat EPS estimates by 14 cents earning 79 cents a share in afterhours trading on Aug. 14. The stock tested my monthly value level at $78.18 on Aug. 14 pre-earnings announcement. Last Thursday the stock popped to $86.90 above my quarterly risky level, now a pivot at $84.22. Buy-and-trade investors could have bought the buy rated stock at $78.18 and sold it the next morning at $84.22 for a gain of 7.7%.
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SYM TRADE IT LAST %CHG
DDS $106.29 -0.09%
DE $96.35 0.17%
CSCO $27.33 -0.07%
M $67.44 -0.40%
NTES $144.93 0.56%

Markets

DOW 17,730.11 -27.80 -0.16%
S&P 500 2,076.78 -0.64 -0.03%
NASDAQ 5,009.2140 -3.9090 -0.08%

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