14 Companies With Volatile Rides After Earnings

NEW YORK (TheStreet) -- The 14 companies we profiled last week pre-earnings performed in choppy trading patterns after reporting. Some initial positive reactions were reversed to the downside, and others that initially took a price hit wound up trading higher by the end of the week.

While 11 of 14 beat analysts' expectations, only seven ended the week higher than the day's close the day before our earnings previews. Among the three that missed EPS estimates, two ended the week higher.

It can be difficult to explain the up and down, or down then up volatility! This is why it's important to know key levels; the five moving averages, value levels, pivots and risky levels.

It is also to important to know whether or not the 12x3x3 weekly slow stochastic is rising or declining. Among the five that beat estimates but ended the week lower, three had declining stochastics which is a clue to sell strength. Among the two that missed estimates but ended the week higher, one had rising stochastics suggesting that weakness was a buying opportunity.

We crunched the numbers to help you decide if and when to invest. See today's 'Crunching the Numbers' table following these profiles.

Blackberry (BBRY) ($8.41, down 10.1% since March 25): Reported earnings before the opening bell on Friday and beat analysts' earnings per share estimates by 48 cents a share reporting a loss of 8 cents a share. The stock opened higher but failed at its 50-day simple moving average at $9.62.

When we profiled the stock on Wednesday in, Investing Ahead of Earnings: Blackberry, GameStop and Lululemon, we mentioned that the stock had been trading back and forth around its 200-day SMA since Jan. 21. Given a 'declining' reading for the 12x3x3 weekly stochastic shown in the table, the downside risk was at least to the 200-day SMA now at $9.03.

In the recent profile we also stated that this was an important earnings report because Blackberry now has a negative weekly chart with its five-week modified moving average at $9.07. A monthly value level is $6.88 with a weekly risky level at $9.03.

Cache (CACH) ($3.11, down 21.9% since March 21): Reported earnings before the opening bell on Tuesday and missed analysts' estimates by 4 cents a share reporting a loss of 17 cents a share.

This stock was profiled on March 24 in, Investing Ahead of Earnings: McCormick, Sonic and Walgreen and we warned that the stock was below all moving averages in the 'Crunching the Numbers' table, and had a negative weekly chart with its five-week MMA now at $4.43. The stock set a 52-week intraday low at $2.99 on Friday.

Finish Line (FINL) ($27.05, down 0.9% since March 25): Reported earnings before the opening bell on Friday and beat analysts' EPS estimates by 2 cents a share earning 87 cents a share. The stock opened higher trading up to $28.00 before reversing down to $26.45 for a test of its quarterly value level at $26.59 where investors could have started a position or added to an existing position.

Keep in mind that we advocate using GTC (good until cancelled) limit orders to either buy weakness to a value level or moving average, or to sell strength to a risky level or moving average. Even though the weekly chart is positive with its five-week MMA at $26.84, a potential double-top is shown on the stock's chart with its all-time intraday high at $28.86 set on Jan. 6 and the March 21 high at $28.69. This week's pivot is $27.60 with a monthly risky level at $28.67 suggesting difficulty in achieving a new high.

Five Below (FIVE) ($42.95, up 11.3% since March 21): Reported earnings after the closing bell on Tuesday and beat analysts' EPS estimates by 2 cents a share earning 47 cents a share. The stock opened on Wednesday above its 200-day SMA at $41.94 trading as high as $44.35 then traded down to a test of the 200-day.

The weekly chart is positive with its five-week MMA at $39.17. Weekly and quarterly value levels are $40.21 and $39.53 with a monthly risky level at $47.09.

Freds (FRED) ($18.10, down 6.6% since March 25): Reported earnings before the opening bell on Thursday and beat analysts' EPS estimates by 2 cents a share earning 17 cents a share. The stock closed below our weekly pivot at $19.31 on Wednesday providing a warning, then failed to hold its 50-day SMA at $18.54 Thursday trading as low as $17.95. The weekly chart is now negative with its five-week MMA at $18.84. A quarterly value level is $16.36 with monthly and semiannual risky levels at $19.59 and $19.77.

GameStop (GME) ($40.62, up 7.5% since March 25): Reported earnings before the opening bell on Thursday and missed analysts' EPS estimates by 2 cents a share earning $1.90 a share. The stock traded as low as $35.27 before changing direction and traded as high as $40.65 on March 28.

The weekly chart is positive with its five-week MMA at $39.00. My semiannual value level is $33.36 with a semiannual pivot at $39.50 and quarterly risky level at $43.53.

Lululemon (LULU) ($51.89, up 8.1% since March 25): Reported earnings before the opening bell on Thursday and beat analysts' EPS estimates by 3 cents a share earning 75 cents a share. The stock gapped above its 50-day SMA at $48.68 at the open and traded as high as $52.98. The weekly chart shifted to positive with its five-week MMA at $50.44 and its 200-week SMA at $55.27. Weekly and monthly risky levels are $53.85 and $58.43.

McCormick (MKC) ($71.32, up 5.6% since March 21): Reported earnings before the opening bell on Tuesday and beat analysts' EPS estimates by 4 cents a share earning 62 cents a share. The stock gapped above its 200-day SMA at $68.74 at the open and traded as high as $71.99. The day's low was $70.02.

The stock was poised for a positive reaction as the weekly chart was positive with its five-week MMA at $67.83. Weekly and monthly value levels are $70.10 and $64.45 with semiannual risky levels at $75.03 and $78.45.

Paychex (PAYX) ($42.56, up 0.2% since March 25): Reported earnings after the closing bell on Wednesday and beat analysts' EPS estimates by 2 cents a share earning 44 cents a share. The stock opened higher on Thursday with the stock trading as high as $43.56 before dipping to as low as $41.75. The high was a test of our quarterly risky level at $43.24 and the low was a test of our weekly value level at $41.82 a range that could have been captured by our trading guidelines.

The weekly chart is positive with its five-week MMA at $42.37. Our semiannual value level is $39.89 with a weekly pivot at $42.18 and quarterly and monthly risky levels at $43.24 and $46.96.

Red Hat (RHT) ($52.23, down 8.9% since March 25): Reported earnings after the closing bell on Thursday and beat analysts' EPS estimates by 2 cents a share earning 28 cents a share. The stock opened lower on Friday trading as low as $51.79 during the session staying above its 200-day SMA at $51.17.

The weekly chart had declining stochastics which provided a warning and this chart is now negative with the five-week MMA at $56.49. Monthly and weekly risky levels are $56.42 and $57.50.

Steelcase (SCS) ($16.30, up 10.1% since March 21): Reported earnings after the closing bell on Tuesday and beat analysts' EPS estimates by a penny a share earning 18 cents a share. The stock gapped above its 200-day SMA at $15.31 on Wednesday and traded as high as $16.91 staying below its multiyear intraday high at $16.94 set on Oct. 30.

The weekly chart had rising stochastics setting the tone for a positive reaction. This chart is now positive with its five-week MMA at $15.13. Semiannual and weekly value levels are $15.46 and $15.33 with a semiannual risky level at $17.03.

Sonic (SONC) ($22.56, up 6.1% since March 21): Reported earnings after the closing bell on March 24 and beat analysts' EPS estimates by a penny a share earning 7 cents a share. The stock traded as low as $20.40 before the closing bell on March 24 giving investors the opportunity to buy weakness to our quarterly value level at $20.81. The stock opened at $22.30 on Tuesday and traded as high as $23.56 on March 26. Investors who bought at $20.81 thus had the opportunity to book profits at our monthly risky level at $22.54. The weekly chart was positive and still is with its five-week MMA at $20.77. This week's risky level is $23.36.

Walgreen (WAG) ($65.36, up 0.9% since March 21): Reported earnings before the opening bell on Tuesday and missed analysts' EPS estimates by 2 cents a share earning 91 cents a share. The stock traded as low as $63.07 on March 14 testing its 50-day SMA at $63.10 giving investors a buying opportunity. The stock traded as high as $68.15 on March 25.

Even with the weekly close above the five-week MMA at $64.50 the weekly chart is not positive as the 12x3x3 weekly slow stochastic is declining. This implies that the stock will not get above its all-time intraday high at $69.84 set on Feb. 28. Quarterly and semiannual value levels are $55.18 and $47.52 with monthly and weekly risky levels at $71.63 and $73.71.

Winnebago (WGO) ($27.02, up 1.4% since March 25): Reported earnings before the opening bell on Thursday and beat analysts' EPS estimates by 4 cents a share earning 35 cents a share. The stock traded as high as $28.27 on Thursday then dipped to $25.98 holding just above the 200-day SMA at $25.97. The weekly chart is positive with its five-week MMA at $26.96.

When I look at the weekly chart it shows some of the same characteristics as seen on the weekly chart of the housing index we showed on March 19 in, Is It Time to Sell Homebuilder Stocks? For this reason our suggestion is to book profits as Winnebago shares are likely to peak below its multiyear intraday high at $32.41 set on Dec. 9. Semiannual value levels are $21.49 and $20.11 with weekly and quarterly risky levels at $29.78 and $30.90.

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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