Apple, Amazon Face Tougher Scrutiny Reporting Earnings

NEW YORK (TheStreet) -- Important earnings reports continue and today I profile four more Dow components, two more tech bellwethers and a high-flying retailer. Investors and traders should continue to focus on the revenue line and forward guidance.

With Apple ( AAPL) and Amazon ( AMZN) reporting after the close on Thursday, my focus is on the Nasdaq following the drubbing it received last week.

The weekly chart for the Nasdaq shifted to negative with Friday's close below its five-week modified moving average at 3072.94 with the 12x3x3 weekly slow stochastic reading declining below 80.00 to 77.78. The downside risk is to the November 2011 high at 2861.51. My annual value level is 2698 with weekly, monthly, annual and quarterly risky levels at 3125, 3210, 3232 and 3295.

The daily chart for the Nasdaq shows the damage caused by Google ( GOOG) on Thursday and Friday. Last week's high 3112.45 was set on Wednesday, and was just shy of the 21-day simple moving average at 3114.77.

On Thursday the Nasdaq fell below its 50-day SMA at 3096.76, which indicates risk to the 200-day SMA at 2969.94. My annual value level is 2698 with weekly, monthly, annual and quarterly risky levels at 3125, 3210, 3232 and 3295.

Chart Courtesy of Thomson/Reuters

At www.ValuEngine.com we show that 56.5% of all stocks are undervalued with 43.5% overvalued with 12 of 16 sectors overvalued. The five most overvalued are; construction by 16.4%, medical by 13.0%, consumer staples by 12.4%, retail-wholesale by 12.0%, finance by 11.7% and utilities by 11.5%.

Reading the Table

OV/UN Valued: The stocks with a red number are undervalued by this percentage. Those with a black number are overvalued by that percentage according to ValuEngine.

VE Rating: A "1-engine" rating is a strong sell, a "2-engine" rating is a sell, a "3-engine" rating is a hold, a "4-engine" rating is a buy and a "5-engine" rating is a strong buy.

Last 12-Month Return (%): Stocks with a red number declined by that percentage over the last 12 months. Stocks with a black number increased by that percentage.

Forecast 1-Year Return: Stocks with a red number are projected to decline by that percentage over the next 12 months. Stocks with a black number in the table are projected to move higher by that percentage over the next 12 months.

Value Level: The price at which to enter a GTC limit order to buy on weakness. The letters mean; W-weekly, M-monthly, Q-quarterly, S-semiannual and A-annual.

Pivot: A level between a value level and risky level that should be a magnet during the time frame noted.

Risky Level: is the price at which to enter a GTC limit order to sell on strength.

Stocks Reporting Earnings Pre-market Wednesday

Boeing ( BA) ($73.70): Has a buy rating according to ValuEngine with a reasonable price-to-earnings ratio, and is above its 200-day SMA at $73.16. The stock set its 2012 high at $77.83 on May 1 and its 2012 low at $66.82 on June 5. The weekly chart is positive with the 200-week SMA at $63.13. Investors and traders should reduce holdings on strength to my quarterly pivot at $74.54 and then employ a buy-and-trade strategy between the value level and risky level.

AT&T ( T) ($35.26): Has a hold rating according to ValuEngine with a reasonable P/E and is above its 200-day SMA at $33.86. The stock set a multi-year high at $38.58 on Sept. 21. The weekly chart profile is negative with the 200-week SMA at $28.62. Investors and traders should reduce positions on strength to my quarterly pivot at $36.39 and then employ a buy-and-trade strategy between the value level and risky level.

Stocks Reporting Earnings Pre-market Thursday

Procter & Gamble ( PG) ($68.50): Has a buy rating according to ValuEngine with a slightly elevated P/E. The stock is above its 200-day SMA at $65.55. PG set a multi-year high at $69.97 on Sept. 25. The weekly chart profile is positive but overbought with the 200-week SMA at $61.32, but may shift to negative on a close this week below its five-week MMA at $68.21. Investors and traders should book profits on strength to my monthly pivot at $68.62 and then employ a buy-and-trade strategy between the value level and risky level.

Under Armour ( UA) ($57.75): Has a hold rating according to ValuEngine with an extremely elevated P/E and is above its 200-day SMA at $49.47. UA set an all-time high at $60.96 on Sept. 14. The weekly chart is neutral with a negative divergence in momentum, and the 200-week SMA at $27.80. Investors and traders should book profits on strength to my quarterly pivot at $60.84 and then employ a buy-and-trade strategy between the value level and risky level.

Stocks Reporting Earnings After-hours Thursday

Apple ( AAPL) ($634.03): Has a buy rating according to ValuEngine with a favorable P/E and is below its 200-day SMA at $584.08. The stock set an all-time high at $705.07 on Sept. 21. The weekly chart ended last week negative with the 200-week SMA at $325.81. Investors and traders should employ a buy-and-trade strategy between the value level and risky level.

Amazon.com ( AMZN) ($233.78): Has a buy rating according to ValuEngine with an extremely elevated P/E and is above its 200-day SMA at $216.12. AMZN traded to an all time high at $264.11 on Sept. 14. The weekly chart ended last week negative with its 200-week SMA at $157.22. Investors and traders should employ a buy-and-trade strategy between the value level and risky level.

Stocks reporting earnings pre-market Friday

Merck ( MRK) ($46.48): Has a buy rating according to ValuEngine with a favorable P/E and is above its 200-day SMA at $40.70. MRK set a multi-year high at $48.00 on Oct. 18. The stock has a positive but overbought weekly chart profile with the 200-week SMA is $34.89. Investors and traders should book profits on strength to my weekly pivot at $47.25.

At the time of publication the author held no positions in any of the stocks mentioned.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

Richard Suttmeier has an engineering degree from Georgia Tech and a master of science from Brooklyn Poly. He began his career in the financial services industry in 1972 trading U.S. Treasury securities in the primary dealer community. In 1981 he formed the Government Bond Department at LF Rothschild and helped establish that firm as a primary dealer in 1986. Richard began writing market research in 1984 and held positions as market strategist at firms such as Smith Barney, William R Hough, Joseph Stevens, and Rightside Advisors. He joined www.ValuEngine.com in 2008 producing newsletters covering the U.S. capital markets, and a universe of more than 7,000 stocks. Richard employs a "buy and trade" investment strategy and can be reached at RSuttmeier@Gmail.com.

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