Missed Corporate Revenue Signals QE Fatigue

NEW YORK ( TheStreet) -- Weakness on the bottom line of an earnings report has become the theme this earnings season, and it's a symptom of QE fatigue at the company level.

The majority of the stocks I have profiled this month have missed revenue estimates and have slumped following the announcements.

Some of these stocks were vulnerable as their weekly chart profiles were already negative or risked becoming negative.

As individual stocks develop QE fatigue, that weakness can spread to other stocks in the same industry or sector. Today I will review the stocks that I profiled late last week and early this week.

Last Tuesday, I profiled nine stocks that planned to report results last Wednesday, Thursday and Friday in "Handicapping Key Earnings Reports." Six of these stocks are Dow Jones Industrial Average components.

On Monday, I profiled seven stocks that planned to reported results on Monday and Tuesday in "Earnings, It's All About the Bottom Line." Three of these stocks are Dow components.

Following are companies that reported earnings last Thursday and Friday:

Google ( GOOG) ($680.35) traded as high as $759.42 before its earnings report was inadvertently released at 12:30 p.m. EDT Thursday. The price gap lower was below my monthly and quarterly value levels, which are now pivots at $740.41 and $713.85, respectively. The 200-day simple moving average (SMA) is at $632.95. Google was below its 200-day SMA until July 20. Then it rallied in parabolic fashion to an all-time high of $774.38 on Oct. 5. The weekly chart profile will be negative at this week's close, which favors a sell-strength strategy for the stock.

Travelers Companies ( TRV) ($73.38) spiked higher at last Thursday's open on better-than-expected earnings and is now in a four-day trading range as an island in the sky on its daily chart. With an overbought weekly chart, the stock should come back down to my quarterly pivot at $68.13.

Morgan Stanley ( MS) ($17.11) opened at $18.57 last Thursday after beating EPS estimates and then traded lower. The weekly chart shifts to negative on a close this week below its five-week modified moving average at $16.81. The downside risk is to my quarterly value level at $13.96.

Microsoft ( MSFT) ($21.79) missed on the revenue line, and the stock traded as low as $27.76 on Tuesday vs. my annual value level at $27.75. My annual pivot is $29.58. The weekly chart profile has been negative since the week of Sept 28. My semiannual value level is $25.32.

Verizon Communications ( VZ) ($44.07) has a negative weekly chart profile, which indicates risk to my annual value level at $39.28.

McDonald's ( MCD) ($87.96) broke below its 200-day SMA at $93.52 on its missed revenue, which was reported before the market opened Friday. MCD has had a negative weekly chart since the week of Oct. 19. This indicates risk to my semiannual value level at $86.46.

General Electric ( GE) ($21.28) broke below my monthly pivot at $22.51 on its revenue miss last Friday. The weekly chart will shift to negative at this week's close, indicating risk to my annual value level at $20.41.

Following are companies that reported Monday and Tuesday:

Texas Instruments ( TXN) ($27.84) missed revenue estimates after Monday's close. On Tuesday it stayed above my monthly value level at $27.06. The weekly chart has been negative since the week ended Sept. 28, with the 200-week SMA a support at $27.08.

DuPont ( DD) ($45.25) missed earnings estimates in a big way, and the stock plunged 9.0% on Tuesday. The stock is below my monthly pivot at $50.45, which indicates risk to my annual value level at $43.12. The weekly chart has been negative since the week of Oct. 5. The 200-week SMA is at $41.77.

3M ( MMM) ($88.73) missed on the revenue line before the market opened Tuesday, and the stock gapped lower and closed just below its 200-day SMA at $88.91. On Monday investors and traders had the opportunity to reduce holdings at my monthly pivot at $93.03. The weekly chart will shift to negative this week. The stock is below semiannual and quarterly pivots at $90.72 and $89.25, respectively, which indicates risk to my annual value level at $73.14.

United Parcel Service ( UPS) ($73.73) reacted positively to earnings with the stock above my semiannual pivot at $70.89 with my monthly risky level at $75.93. The weekly chart shifts to positive with a close this week above the five-week modified moving average at $73.28.

United Technologies ( UTX) ($77.07) missed on the revenue line on Tuesday. The stock opened below its 200-day SMA at $78.48 and traded as low as $76.35. The weekly chart has been negative since the week of Oct. 5. The risk is to the 200-week SMA at $70.92.

Netflix ( NFLX) ($68.22) met earnings estimates but cut its subscriber forecast. The stock fell 16% to $56.74 in after-hours trading on Tuesday. The weekly chart shifts to neutral on a close this week below its five-week modified moving average at $63.79. The stock had a strong sell rating, according to www.ValuEngine.com, so a negative reaction should not be a surprise. The stock has a base at lows of $52.81 on Aug. 3, $53.13 on Sept. 4 and $53.05 on Sept. 26.

At the time of publication, Suttmeier had no positions in 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.