NEW YORK (TheStreet) -- Shares of Procter & Gamble (PG) - Get Report suffered from downside price gaps following earnings released on Jan. 27 and April 23, and the stock plunged 17.9% from its December all-time high to its June 2015 low.
A new company CEO was announced on Tuesday and Procter & Gamble reports quarterly results before the opening bell Thursday. Analysts expect the company to earn 94 cents to 95 cents a share. Barclays chimed in, reiterating an equal weight rating for the stock and an $84 price target. P&G shares closed Tuesday at $80.24, down nearly 12% so far this year.
Overall, analysts are not thrilled with the prospect of a quick stock turnaround as ETFChannel.com ranked Procter & Gamble as 24th out of the 30 components of the Dow Jones Industrial Average and number 391 among the broader Standards & Poor's 500.
Let's illustrate how investors can use must-see daily and weekly and key trading levels to help make investment decisions for the stock both before and after earnings are recorded.
Here's the daily chart for Procter & Gamble.
Courtesy of MetaStock Xenith
Procter & Gamble had a close of $80.23 on Tuesday, down 11.9% year to date with the stock above its 50-day simple moving average of $79.98 and below its 200-day simple moving average of $84.50.
The stock set an all-time intraday high of $93.89 on Dec. 24. On Jan. 27 a premarket negative reaction to earnings caused a price gap lower of 2.8% from the close of $89.58 on Jan. 26 to the open of $87.10 on Jan. 27. The stock would decline to its 200-day simple moving average and continued holding the 200-day until March 3. The 200-day then became a barrier last tested on March 24.
The price gap lower on April 23 was also caused by a negative reaction to earnings before the market opened that day. The decline from the April 22 close of $83.09 to the open of $81.41 on April 23 totaled just 2% but was followed by a test of the 2015 low of $77.10 set on June 8. Note that share price weakness resulted in a "death cross" confirmed on April 1.
Here's the weekly chart for Procter & Gamble.
Courtesy of MetaStock Xenith
The weekly chart for Procter & Gamble will shift to positive if the stock ends the week on Friday above its key weekly moving average of $80.45. If not, the key level to hold on weakness is the 200-week simple moving average of $76.14, which is considered a reversion to the mean. The weekly momentum reading is projected to be 57.96 this week up from 51.89 on July 24. The stock has been above its 200-week since the week of July 13, 2012 when the average was $61.01.
Investors looking to buy Procter & Gamble should place a good till canceled limit order to buy the stock if it drops to $78.79, which is a key level on technical charts until the end of this week.
Investors looking to reduce holdings should place a good till canceled limit to sell the stock if it rises to $82.04, which is a key level on technical charts until the end of 2015.
Investors not familiar with technical analysis should begin with the notion that a price chart for a stock shows a road map of past price performance, which provides guidance for predicting future share price direction.
Here's how to read a daily chart. There are two moving averages to follow; the 50-day simple moving average is in blue while the 200-day simple moving average is in green.
Here's how to read a weekly chart. The red line tracks the ups and downs of the key weekly moving average. The green line is the 200-week simple moving average. The red line that oscillates along the bottom of the chart is the momentum reading on a scale of 00.00 to 100.00. A reading below 20.00 is oversold and a reading above 80.00 is overbought.
A technically positive weekly chart occurs when a stock ends a week above its key weekly moving average with the momentum reading rising above 20.00.
A technically negative weekly chart occurs when a stock ends a week below its key weekly moving average with the momentum reading declining below 80.00.
This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.