How to Invest Ahead of Earnings Reports: Costco, Kroger, Pandora

Editor's note: After posting the Pandora analysis, we learned that the company shifted its earnings cycle, but the profile is still valid.

NEW YORK (TheStreet) -- Today's pre-earnings buy-and-trade profiles include familiar big box retailers, niche mall shops and a mining company, that report pre- and post-market Thursday and before the opening bell on Friday.

A detailed technical analysis chart about these stocks follows these profiles. I also explain my number-crunching terms there.

Costco Wholesale (COST) ($116.65, down 2% YTD): Analysts expect the members-only wholesale retailer to report earnings of $1.17 a share before the opening bell on Thursday. The stock set a 2014 intraday low at $109.50 on Feb. 4 and is just above its 200-day simple moving average at $115.97 and is above all five key moving averages shown in today's 'Crunching the Numbers' table. The weekly chart is positive with its five-week modified moving average at $111.84. Weekly and annual value levels are $112.83 and $112.00 with monthly and semiannual risky levels at $123.40 and $126.15.

Foot Locker (FL) ($42.79, up 3.3% YTD): Analysts expect the mall-based footwear retailer to report earnings of 75 cents a share premarket on Friday. The stock set an all-time intraday high at $42.98 on Tuesday. The stock is above all five key moving averages shown in today's table. The weekly chart is positive with its five-week MMA at $40.27. My semiannual and monthly value levels are $40.70 and $40.27 with quarterly and semiannual risky levels at $46.26 and $46.78.

Joy Global (JOY) ($55.29, down 5.5% YTD): Analysts expect the mining equipment maker to report earnings of 64 cents per share before the opening bell on Thursday. The stock set its 2014 intraday low at $51.17 on Feb. 3 and today it's above its 200-day SMA at $53.51. The stock is above the three daily moving averages but is below the two weekly moving averages. The weekly chart is neutral with a rising 12x3x3 weekly slow stochastic and thus the weekly chart shifts to positive with a weekly close above its five-week MMA at $55.32. My weekly value level is $54.47 with a monthly risky level at $59.08.

Kroger (KR) ($42.39, up 7.2% YTD): Analysts expect the grocery chain to report earnings of 73 cents a share before the opening bell on Thursday. The stock set its 2014 intraday low at $35.13 on Feb. 5 then set its 2014 high at $42.98 on Tuesday well above its 200-day SMA at $38.68. Kroger is above all five key moving averages shown in today's table. The weekly chart is positive with its five-week MMA at $39.59. Quarterly and annual value levels are $38.90 and $36.32 with a monthly risky level at $45.53.

Pandora (P) ($39.17, up 47.3% YTD): At the time of publication, I did not have an EPS estimate from analysts. We since learned that the company shifted its earnings cycle, but the profile is still valid. The stock set a new all-time intraday high at $39.68 on Tuesday and is above four of five key moving averages shown in today's table. Pandora has not been publicly traded long enough to have a 200-week SMA. The weekly chart is positive but overbought with its five-week MMA at $35.52. My monthly value level is $37.81 with a weekly risky level at $43.68.

Children's Place (PLCE) ($55.10, down 3.3% YTD): Analysts expect the specialty retailer of children clothes from newborns to 12 years of age to report earnings of 94 cents a share before the open on Thursday. The stock set its 2014 intraday low at $50.25 on Feb. 5 and is now above its 200-day SMA at $54.32. The stock is above all five key moving averages shown in today's table. The weekly chart is positive with its five-week MMA at $54.34. Quarterly and annual value levels are $52.92 and $51.32 with a monthly pivot at $54.68 and semiannual risky levels at $67.92 and $69.16.

Staples (SPLS) ($13.47, down 15.2% YTD): Analysts expect the office supplies retailer to report earnings of 39 cents a share before the opening bell on Thursday. The stock set its 2014 intraday low at $12.61 on Feb. 25 and is below four of the five key moving averages in today's table. Staples is above its 21-day SMA at $13.20. The weekly chart is negative but oversold with its five-week MMA at $13.70. My weekly value level is $11.24 with a semiannual pivot at $13.67 with quarterly and annual risky levels at $14.53 and $15.54.

Crunching the Numbers with Richard Suttmeier

In the column labeled Last 12-Month Return I show the percent gain or loss over the last 12 months.

There are five columns with moving average titles: Five-Week Modified Moving Average, 21-Day Simple Moving Average, 50-Day Simple Moving Average, 200-Day Simple Moving Average and the 200-Week Simple Moving Average.

The column labeled 12x3x3 Weekly Slow Stochastics shows the pattern on each weekly chart with readings from Oversold, Rising, Overbought, Declining or Flat.

Interpretations: (stocks below a moving average listed in Red are below that moving average)

Five-Week Modified Moving Average (MMA) is one of two indicators that define whether or not a weekly chart profile is positive, neutral or negative. The other is the status of the 12x3x3 weekly slow stochastic.

A stock with a positive technical rating is above its five-week MMA with rising or overbought stochastics.

A stock with a negative technical rating is below its five-week MMA with declining or oversold stochastics.

A stock with a neutral technical rating has a profile that is not positive or negative.

The 200-Week Simple Moving Average (SMA) is considered a long-term technical support or resistance and as a "reversion to the mean" over a rolling three to five year horizon. (even Apple declined to its 200-week SMA in June 2013)

The 21-Day Simple Moving Average is a short-term technical support or resistance used by many hedge fund traders to adjust positions. A stock above its 21-day SMA will likely move higher over a rolling three to five day horizon and vice versa.

The 50-Day Simple Moving Average is also a technical support or resistance used by many strategists and commentators in financial TV.

The 200-Day Simple Moving Average is another technical support or resistance and I consider this level as a shorter-term "reversion to the mean" over a rolling six to 12 month horizon. (even Apple tested or crossed its 200-day SMA in nine of the last 10 years)

Value Levels, Pivots and Risky Levelsare calculated based upon the last nine weekly closes (W), nine monthly closes (M), nine quarterly closes (Q), nine semiannual closes (S) and nine annual closes (A). I have one column for pivots, which is a magnet for the period shown. The columns to the left of the pivots are first and second value levels. The columns to the right of the pivots are first and second risky levels.

Investors who wish to buy a stock should use a good-until-canceled GTC limit order to buy weakness to a value level. Investors who want to sell a stock should use a GTC limit order to sell strength to a risky level.

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

Follow @Suttmeier

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff

Richard Suttmeier is the chief market strategist at ValuEngine.com. He has been a professional in the U.S. Capital Markets since 1972, transferring his engineering skills to the trading and investment world.

Suttmeier has an engineering degree from Georgia Tech and a Master of Science degree from Brooklyn Poly. He began his career in the financial services industry in 1972 trading U.S. Treasury securities in the primary dealer community. He became the first long bond trader for Bache in 1978, and formed the Government Bond Department at LF Rothschild in 1981, helping establish that firm as a primary dealer in 1986. This experience gives him the insights to be an expert on monetary policy, which he features in his newsletters, and market commentary.

Suttmeier's industry licenses include, Series 7 and Registered Principal (Series 24). He has been the Chief Market Strategist for ValuEngine.com since 2008 and often appears on financial TV.

Click here for details on Suttmeier's "Buy and Trade" investment strategy.

Richard Suttmeier can be reached at RSuttmeier@Gmail.com

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