Deere (DE) - Get Deere & Company Report -- maker of farm equipment, lawn tractors, and snow removal machines -- will report quarterly results before the opening bell on Wednesday. The stock is under a technical "death cross" on its daily chart, which occurs when the 50-day simple moving average falls below its 200-day simple moving average. The plunge from a multiyear high in June to a multiyear low in October put the stock in bear market territory.
It's unusual that a stock would have this type of downside volatility given its 11-quarter winning streak in beating analysts' earnings-per-share estimates. Analysts expect Deere to earn 74 cents a share.
Deere is one of eight stocks Warren Buffett is selling in 2015. In a regulatory filing in February, Berkshire Hathaway disclosed a sizable holding of 17.3 million shares, which was reduced by 2% in the third quarter to 17.1 million shares, a reduction of about $1.3 billion in shares.
Societe Generale initiated coverage of Deere with a hold rating and a $79 price target. This rating reflected the notion that farm demand would remain challenging.
Here's the daily chart for Deere.
Courtesy of MetaStock Xenith
The daily chart shows that Deere had a close of $74.61 on Monday, up 0.8% so far in the fourth quarter but down 15.7% year to date. It is in bear market territory -- 24% below the all-time high of $98.23, set on June 30.
The stock began 2015 by forming a "golden cross" on Jan. 16, when the stock closed at $87.30. A "golden cross" occurs when the 50-day simple moving average rises above the 200-day simple moving average, indicating that higher prices lie ahead. This signal was still in effect when the stock set its multiyear high of $98.23 on June 30.
On Aug. 21, Deere beat earnings estimates, but the report included weak guidance. The stock gapped lower, below its 200-day simple moving average. The stock continued lower, trading as low as $71.85 on Oct. 2. The stock was obviously hurt by the flash crash of Aug. 24.
The stock is significantly below its 50-day and 200-day simple moving averages of $77.05 and $87.16 after a "death cross" was confirmed on Sept. 15, when the stock closed at $81.41. A "death cross" occurs when the 50-day SMA crosses below the 200-day SMA, indicating that lower prices lie ahead.
Here's the weekly chart for Deere.
Courtesy of MetaStock Xenith
The weekly chart for Deere is neutral, with the stock below its key weekly moving average of $77.15 and its 200-week simple moving average of $85.49. The weekly momentum reading is projected to rise to 26.73 this week, up from 25.23 on Nov. 20. Momentum scales from 00.00 to 100.00, with a reading below 20.00 oversold and a reading above 80.00 overbought. A rising reading above 20.0 is positive while a declining reading below 80.00 is negative. This study is shown in red along the bottom of the chart.
The horizontal lines are the Fibonacci Retracements of the rally from the March 2009 low of $24.54 to the all-time high on $99.80, set in April 2011. The stock is trading between its 38.2% retracement of $71.03 and its 23.6% retracement of $82.02.
Investors looking to buy Deere should place a good-till-canceled limit order to buy the stock if its drops to $65.29, which is a key level on technical charts until the end of 2015.
Investors looking to reduce holdings should place a good-till-canceled limit order to sell the stock if it rises to $77.71 and $81.69, which are key levels on technical charts until the end of this week and the end of November, respectively.
This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.