Procter & Gamble (PG) shares are under a bit of pressure on Thursday after the consumer-products icon reported fiscal-second-quarter earnings.
Earnings of $1.42 per share came in 5 cents ahead of estimates. But revenue of $18.24 billion, up 4.6% from a year earlier, missed analysts’ expectations by $130 million.
Gross margin came in ahead of expectations, while management’s full-year outlook was mostly in line with estimates.
It was a not great but not bad quarter. That’s likely why we’re seeing a tepid response in the stock price, particularly as P&G stock flirts with a move to all-time highs.
Was the report good enough to send it to new highs? Evidently not. But even though momentum is waning, I don’t know that the quarter was bad enough to break its trend.
Let’s look at the charts.
Trading Procter & Gamble Stock
When I looked at the chart above, Procter & Gamble’s rise over the past 12 months stood out to me first. The Cincinnati company's shares have risen about 40% over the past year, slowly and steadily.
You’ll also notice the stock’s series of higher lows, shown via purple arrows on the chart. There’s also resistance at the $126 mark, which has stymied P&G’s advance over the past two months.
Finally, traders will also notice how some of P&G’s longer-term trends - like the 50-day and 100-day moving averages - have gone from trending sharply higher to tapering off.
That’s as momentum has waned over the prior few months, where new highs were occurring but were taking much longer to achieve.
So what’s the plan now?
First, l do not want to bet against a trend until it gives me a reason to. This means that as long as Procter & Gamble stock continues to find support at the 100-day moving average, there’s no reason to bet against it.
To test this level, it would require a drop down to about $121.75. Traders can buy on a slightly larger decline toward this level, looking for support to buoy the shares and send them back to $126 resistance. A close over $126 could trigger a breakout toward $130.
If, however, the 100-day moving average fails as support, look for a drop to the $115-to-$116 area, or the 200-day moving average, whichever comes first.
It’s been more than 15 months since PG tested the 200-day moving average. Short of a marketwide meltdown, it should act as support upon its first test.