J.B. Hunt Transport Services (JBHT - Get Report) reports earnings after the closing bell Monday, July 15. The stock popped by 5% to as high as $92.81 Friday morning as some on Wall Street realized that the rails and truckers have survived the adverse effects of increased tariffs. If the economy remains strong, transports will benefit. My call is to buy J.B. Hunt down to its July value level at $84.47.
J.B. Hunt closed the first half of 2019 at $91.41, which became a key input to my proprietary analytics. The only level left over from the first half is its annual risky level above the market at $123.15. The daily chart shows a "death cross," but the weekly chart will be upgraded to positive, if Friday's close is above its five-week modified moving average at $91.78.
Fundamentally, J.B. Hunt is reasonably priced with a P/E ratio of 15.37 and a dividend yield of 1.19%, according to Macrotrends. Analysts expect the trucker to earn $1.38 per share when it reports after the close on Monday, July 15. Wall Street expects that earnings will show year over year gains on higher revenue. The stock gapped lower following its prior earnings report released on April 15. This led to its 52-week low of $83.64 set on May 30.
Longer term, J.B. Hunt is consolidating a bear market decline of 36% from its all-time intraday high of $131.74 set during the week of June 15, 2018 to its May 30 low of $83.64. The stock is down 0.8% year to date and has rebounded 10% from the low.
The Daily Chart for J.B. Hunt
Courtesy of Refinitiv XENITH
The daily chart for J.B. Hunt shows the formation of a "death cross" on Oct. 16 when the 50-day simple moving average declined below the 200-day simple moving average to indicate that lower prices lie ahead. This signal was in play when the stock set its 2019 high of $114.46, which was just below the 200-day SMA then, at $114.55. The horizontal lines are the value levels for July at $84.47. The semiannual risky level for the second half of 2019 is $107.94. The third-quarter risky level is $122.14. The annual risky level remains at $123.15.
The Weekly Chart for J.B. Hunt
Courtesy of Refinitiv XENITH
The weekly chart for J.B. Hunt will be upgraded to positive if the stock ends Friday above its five-week modified moving average at $91.78. The stock is below its 200-week simple moving average or "reversion to the mean" at $97.16, last crossed to the downside during the week of May 24. The 12x3x3 weekly slow stochastic reading is projected to rise to 28.98 this week up from 23.75 on July 5.
Trading Strategy: Buy weakness down to the monthly value level at $84.47 and reduce holdings on strength to the semiannual, quarterly and annual risky levels at $107.94, $122.14 and $123.15, respectively. Traders can sell strength to the 200-week SMA at $97.16.
How to use my value levels and risky levels:
Value levels and risky levels are based upon the last nine weekly, monthly, quarterly, semiannual and annual closes. The first set of levels was based upon the closes on Dec. 31. The original annual level remains in play. The weekly level changes each week. The monthly level was changed at the end of each month, the latest on June 28. The quarterly level was changed at the end of June. My theory is that nine years of volatility between closes are enough to assume that all possible bullish or bearish events for the stock are factored in. To capture share price volatility investors should buy on weakness to a value level and reduce holdings on strength to a risky level. A pivot is a value level or risky level that was violated within its time horizon. Pivots act as magnets that have a high probability of being tested again before its time horizon expires.