Trading Earnings Volatility

NEW YORK ( TheStreet) -- During earnings season, my writing focuses on earnings expectations vs. price action.

I profile key stocks to provide investors and traders with information and data that can be used judge how to "buy and trade" each stock both before and after its earnings release.

I provide value levels, pivots and risky levels, which are action levels at which to buy weakness or to sell strength using good-'til-cancelled limit orders. If you consider each stock as a horse, my analysis is your handicap sheet.

My theme this earnings season has been that the majority of companies would likely meet or beat EPS estimates but miss on the revenue line, and that some could issue weak forward guidance.

I shifted to a negative market outlook following the market-positive reaction to the release of the Federal Reserve's QE3 initiatives announced on Sept. 12. As stocks, sectors and the equity averages started to experience deteriorating technicals, I said declining prices were a contagion called "QE fatigue."

Today I outline how eight stocks performed vs. their technicals and key levels to see which stocks had "buy and trade" opportunities and which did not.

On Monday, Oct. 22, I profiled seven stocks in "Earnings, It's All About the Bottom Line." The first stock I review today was handicapped in that article.

The other stocks I am reviewing today were profiled on Tuesday, Oct. 23 in "Apple, Amazon Face Tougher Scrutiny Reporting Earnings."

Norfolk Southern ( NSC) ($62.77) missed on the revenue line and projected lower coal shipments through 2013. The stock gapped lower last Wednesday below my monthly pivot at $65.29 with an intraday low at $60.96. The 200-week simple moving average is a major support at $59.06. Weekly and semiannual value levels are $61.01 and $58.29, respectively, with a semiannual risky level at $68.50.

Boeing ( BA) ($71.11) beat EPS but missed on the revenue line. The stock opened higher last Wednesday at $74.95, which gave investors and traders the opportunity to reduce positions against my quarterly pivot at $74.54. The stock traded below my monthly value level at $71.27, which gave investors and traders the opportunity to buy back the shares sold at $74.95. The 200-week SMA and semiannual value level are $63.12 and $59.43, respectively, with a weekly pivot at $71.42 and a quarterly risky level at $74.54.

AT&T ( T) ($34.63) beat EPS but missed on the revenue line. The stock opened lower last Wednesday and trades between my annual value level at $31.07 and my quarterly risky level at $36.39.

Procter & Gamble ( PG) ($69.44) beat analysts' estimates and reported that it was on track to cut 5,700 jobs by year-end. The stock popped to $70.83 at last Thursday's open, allowing investors and traders to reduce positions at my quarterly risky level at $70.38. The 200-day SMA and semiannual value level are $65.60 and $61.55, respectively, with my quarterly pivot at $70.38 and weekly and annual risky levels at $70.92 and $78.47, respectively.

Under Armour ( UA) ($52.15) beat EPS, matched on revenue, but lowered guidance, and the stock gapped lower on last Thursday's open, trading down from $55.50 then down to $50.03 last Friday vs. its 200-day SMA at $49.80. Below the 200-day is my semiannual value level at $42.68. Weekly and quarterly risky levels are $54.17 and $60.84, respectively.

Amazon.com ( AMZN) ($238.24) missed on both EPS and on revenue. I saw Amazon trade as low as $205.25 in after-hours trading vs. the 200-day SMA at $217.17. This helped stabilize the stock. Amazon wants to be viewed as a growth stock, and the market agreed. The stock recovered to $238.71 on Friday, as my semiannual pivot at $236.23 provided a magnet. Investors and traders who are bullish on Amazon could have taken advantage of this volatility. My weekly and quarterly risky levels are $251.63 and $263.71, respectively.

Apple ( APPL) ($604.00) missed on EPS with a modest beat on the revenue line. I saw Apple trade as low as $589.00 in after-hours trading last Thursday, staying above its 200-day at $587.85. Apple returned to its 4:00 p.m. EDT close at $609.54, and then traded as high as $614.00 on Friday. Apple traded as low as $591.00 on Friday, staying above the 200-day, which was a buying opportunity for investors and traders who still like the Apple story. My semiannual value level is $481.73 with weekly and quarterly risky levels at $632.23 and $674.21, respectively.

Merck ( MRK) ($46.15) missed revenue estimates before the market opened last Friday. The stock opened at $45.79 and traded up to $46.76. The trade is between my monthly value level at $44.52 and my weekly risky level at $47.25.

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.