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Procter & Gamble Slips After Earnings - Is It a Buying Opportunity?

Procter & Gamble is dipping after reporting earnings. Is it a buying opportunity? Let's see where support comes into play.

Procter & Gamble  (PG) - Get Procter & Gamble Company (The) Report shares tried to rally in premarket trading Wednesday after the company reported earnings.

However, the gains were just too hard to come by for the stock, with the shares down about 1.5% on Wednesday.

Bulls recognize P&G as a high-quality operator with a solid dividend, paying out a 2.4% yield. Proving its operation prowess, the company reported a top- and bottom-line beat for its fiscal second quarter. 

Earnings rose 15.5% year over year, while revenue jumped 8% to $19.7 billion. Even better, management gave a boost to its full-year outlook.

With a solid quarter in hand and the stock down in eight of the past nine sessions and working on its third straight weekly decline, let’s take a closer look at the stock.

Trading Procter & Gamble

Daily chart of Procter & Gamble stock.

Daily chart of Procter & Gamble stock.

As the daily chart highlights, the momentum has not favored the bulls. Admittedly, the chart is also a little busy here, but it highlights a few key observations.

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First, We have a bit of a head-and-shoulders pattern here (drawn in blue). When the neckline gave way on Tuesday ahead of earnings, bulls needed to see this level reclaimed after the report.

So far that’s not happening, adding more evidence to the bear case. Declining on good news generally isn’t constructive price action, either.

From here, we either need to see P&G show some resilience and reclaim $134.50 or we need to see a deeper decline. Regarding the latter, getting down into the $128 to $130.50 zone is a start.

For aggressive bulls, they will consider Procter & Gamble stock close enough and take a shot at it near current levels. More conservative buyers will prefer a dip to this zone though, and so would I. 

In it, the stock will find its 200-day moving average near $130.50 and the 50-week moving average near $128. Further, the 161.8% extension from the January high to the December low is around $130, while the pre-coronavirus 2020 high is at $128.

All of these levels should combine for a decent support zone. It also helps that we’re seeing some divergence on the Williams %R measure, shown at the top of the chart (blue circle).

A close below $128 and bulls may want to wait for P&G stock to settle down, as support will have clearly failed.