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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.

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 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.

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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DDS $135.46 1.10%
DE $87.44 0.03%
CSCO $27.11 0.07%
M $63.64 0.60%
NTES $103.99 2.50%


DOW 17,712.66 +34.43 0.19%
S&P 500 2,061.02 +4.87 0.24%
NASDAQ 4,891.2190 +27.8570 0.57%

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