Investing Ahead of Earnings: Adobe, FedEx, KB Home and Oracle

NEW YORK (TheStreet) -- Here, we preview seven companies reporting earnings Tuesday and Wednesday. We crunch the numbers, you decide when to invest.

Adobe Systems (ADBE) ($67.19, up 12.2% YTD): Analysts expect the software provider to report earnings of 12 cents a share after the closing bell on Tuesday. The stock set an all-time intraday high at $71.11 on Feb. 28 and begins this week between its 50-day simple moving average at $63.64 and its 21-day SMA at $68.21. The weekly chart is positive but overbought with its five-week modified moving average at $65.31 in a pattern that appears like a parabolic bubble ready to pop. Quarterly and annual value levels are $60.08 and $43.19 with monthly and weekly risky levels at $68.28 and $69.57.

FedEx (FDX) ($136.76, down 4.9% YTD): Analysts expect the package delivery company to report earnings of $1.53 a share before the opening bell on Wednesday. The stock began 2014 setting a new all-time intraday high at $144.39 on Jan. 2 then traded as low as $128.17 on Feb. 4 and begins this week just above its 50-day SMA at $135.98. The weekly chart is positive with the stock above its five-week MMA at $135.78 and a close this week below the five-week will pop a parabolic bubble. Quarterly and weekly value levels are $129.45 and $128.45 with a semiannual pivot at $133.40 and monthly risky level at $154.96.

General Mills (GIS) ($49.77, down 0.4% YTD): Analysts expect the packaged food company to report earnings of 64 cents a share before the opening bell on Wednesday. Last Friday General Mills issued an earnings warning and the prior EPS estimate was 68 cents. The stock set an all-time intraday high at $53.07 back on Aug. 1, 2013, then traded as low as $46.70 on Feb. 5 before trading up to a 2014 intraday high at $51.67 last Thursday. Friday's close was just above its 200-day SMA at $49.61. The weekly chart is positive with its five-week MMA at $49.63 and a close this week below this key level is a warning. There is a tight zone of levels from my proprietary analytics. A quarterly value level is $49.33 with a weekly pivot at $50.41 and monthly and annual risky levels at $51.04 and $52.91. Below there numbers is a semiannual value level at $32.19.

KB Home (KBH) ($17.51, down 4.2% YTD): Analysts expect the homebuilder to report earnings of 8 cents a share before the opening bell on Wednesday. The stock traded as high as $20.78 on Feb. 27 then declined to as low as $17.09 on Friday below its 200-day SMA at $18.03. The weekly chart is negative with its five-week MMA at $18.58 and the 200-week SMA at $13.41. Monthly and semiannual value levels are $16.97 and $13.60 with weekly and quarterly risky levels at $19.54 and $25.46.

Herman Miller (MLHR) ($28.85, down 2.3% YTD): Analysts expect the provider of office furniture to report earnings of 34 cents a share after the closing bell on Wednesday. The stock set a multiyear intraday high at $32.31 on Nov. 29 then traded as low as $26.25 on Feb. 4 before rebounding to Friday's close above its 200-day SMA at $28.60. The weekly chart is positive with its five-week MMA at $28.58. Weekly and annual value levels are $27.60 and $21.41 with a semiannual pivot at $29.64 and monthly and quarterly risky levels at $30.47 and $31.63.

Oracle (ORCL) ($37.60, down 1% YTD): Analysts expect the software company to report earnings of 67 cents a share after the closing bell on Tuesday. The stock set a multiyear intraday high at $39.85 on March 6 then closed Friday below its 50-day SMA at $37.90. The weekly chart is neutral with overbought stochastics but with the stock below its five-week MMA at $37.83 and its 200-week SMA at $31.02. A close this week below the five-week MMA is a warning for the stock and the tech sector. My annual value level is $35.77 with a semiannual pivot at $38.04 and quarterly and monthly risky levels at $40.21 and $40.30.

Vera Bradley (VRA) ($26.48, up 10.1% YTD): Analysts expect the retailer of accessories for women to report earnings of 46 cents a share before the opening bell on Wednesday. The stock traded to an intraday 52-week high at $28.60 on March 12 then slipped to its 21-day SMA at $26.55 on Friday. The weekly chart is positive but overbought with its five-week MMA at $25.64. My quarterly pivot is $29.84 with a monthly risky level at $30.15.

Crunching the Numbers with Richard Suttmeier

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 Levels are 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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