Take Advantage of Earnings Volatility

NEW YORK (TheStreet) -- Buy weakness to a value level or key moving average, or sell strength to a risky level or key moving average. This allows investors and traders to capture volatility both before and after earnings releases. All you need to do is enter GTC Limit Orders to buy weakness at a key level or to sell strength to a key level. Capturing volatility is the name of the game during every earnings season.

The majority of companies have been missing revenue estimates when reporting their third quarter results. As a result the number of stocks that are rolling into a negative weekly chart profile has been increasing. As stocks succumb to "QE fatigue" so do the stock's sector and the major equity averages.

On Oct. 29, while the stock market was closed because of the approach of Hurricane Sandy, I profiled eight stocks in This Week's Key Earnings Reports. Today I review how seven of these stocks performed versus their key levels. Only one of these stocks did not miss on the bottom line.

On Oct. 30, while the stock market was closed because of the wrath of super-storm Sandy, I wrote Trading Earnings Volatility, and today I provide updated profiles for six of these names.

Norfolk Southern ( NSC) ($60.99): Set a new 2012 low at $60.71 on Monday. Consider buying weakness to the 200-week simple moving average at $59.78 with weekly and semiannual value levels at $58.78 and $58.29. My monthly risky level is $66.41.

Boeing ( BA) ($70.41): Consider a buy-and-trade strategy on weakness to my monthly value level at $69.69.

Procter & Gamble ( PG) ($68.67): The weekly chart profile shifts to negative on a close this week below the five-week modified moving average at $68.61. My quarterly pivot is $70.38.

Under Armour ( UA) ($53.00): Remains above its 200-day SMA at $50.26 but below its five-week MMA at $54.65.

Amazon.com ( AMZN) ($234.33): The influence from weekly and semiannual pivots at $233.53 and $236.23 should keep the stock in a tradable range between $223.00 and $238.70.

Apple ( AAPL) ($584.62): Has been below its 200-day SMA at $592.91 for the past two days. In mid-June 2011 Apple spent just six days below this key moving average. This week's pivot has a high probability of being tested this week.

Pfizer ( PFE) ($24.58 vs. $25.43 on Oct. 29): When the stock market reopened Oct. 31 this stock traded up to my quarterly risky level at $25.74, where profits should have been taken. The stock is now below its 50-day SMA at $24.79. The weekly chart profile is negative with the five-week MMA at $24.78. My semiannual value level is $20.51 with the quarterly pivot at $25.74.

Barrick Gold ( ABX) ($35.08 vs. $39.18 on Oct. 29): Tested its 200-day SMA at $40.69 Wednesday for an opportunity to sell strength. I do not show a value level but my semiannual pivot is $37.60.

Teva Pharmaceuticals ( TEVA) ($41.14 vs. $40.39 on Oct. 29): The stock is trading between its 50-day SMA at $40.40 and its 200-day SMA at $41.80.

Exxon Mobil ( XOM) ($90.63 vs. $90.62 on Oct. 29): Weakness on Monday held my monthly pivot at $89.78 with the close just below the 50-day SMA at $90.77. The weekly chart shifts to negative on a close this week below the five-week MMA at $90.62. This week's risky level is $92.87.

Newmont Mining ( NEM) ($48.39 vs. $53.07 on Oct. 29): My annual pivot and semiannual risky level at $53.89 and $54.88 last Wednesday where investors and traders were advised to sell strength. The stock ended last week below my quarterly pivot at $49.36. My new monthly value level is $41.67.

Starbucks ( SBUX) ($51.01 vs. $45.87 on Oct. 29): Matched revenue estimates and gave an optimistic outlook. The stock popped above my semiannual pivot at $49.81 on Friday to a test of its 200-day SMA at $51.37. My annual value level is $44.25 with a monthly risky level at $53.41.

Chevron ( CVX) ($109.19 vs. $111.18 on Oct. 29): Traded down from $111.94 last Wednesday to a test of its 200-day SMA at $107.57 on Friday. My monthly value level is $107.67 with a weekly risky level at $113.22.

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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