Investing Ahead of Earnings: CarMax, Monsanto, Micron and Texas Industries

NEW YORK (TheStreet) -- Today we crunch the numbers of four companies reporting earnings this week. Let's take a look.

CarMax (KMX) ($46.80, down 0.5% YTD): Analysts expect the retailer of used cars to report earnings per share of 53 cents a share before the opening bell on April 4. The stock traded to an all-time intraday high at $53.05 on Dec. 19 then traded down to a 2014 intraday low at $43.90 on Jan. 16. CarMax rebounded from there to its 200-day simple moving average at $48.11 on Feb. 29, moved above it to a 2014 intraday high at $49.68 on March 5. After trading back and forth around the 200-day the stock slumped to as low as $44.90 on March 27. This volatile ride has the weekly chart neutral with the stock below its five-week modified moving average at $47.14 with rising stochastics. Volatility has been around a semiannual pivot at $46.64 with quarterly, weekly and semiannual risky levels at $47.29, $49.53 and $51.13.

Monsanto (MON) ($113.77, down 2.4% YTD): Analysts expect the provider of state-of-the-art technology-based improvements in the agricultural markets to report earnings of $3.10 per share before the opening bell on April 2. The stock traded to a multiyear intraday high at $117.50 on Jan.2 then slumped to a 2014 intraday low at $104.08 on Feb. 3 which was below the 200-day SMA. Monsanto stayed below the 200-day for only three days then traded as high as $115.00 on March 21. The weekly chart is positive with its five-week MMA at $112.44. Semiannual value levels are $88.87 and $88.55 with weekly, monthly and annual risky levels at $117.43, $119.25 and $129.57.

Micron Tech (MU) ($23.66, up 8.8% YTD): Analysts expect the provider of semiconductor memory solutions to report earnings of 60 cents a share after the closing bell on April 3. The stock traded to a multiyear intraday high at $25.68 on Feb. 19 and is now below its 21-day and 50-day SMAs converged at $23.99 and $24.00. The weekly chart shifts to negative given a close this week below its five-week MMA at $23.46. Quarterly and semiannual value levels are $20.68 and $14.84 with weekly and monthly risky levels at $24.68 and $28.12.

Texas Industries (TXI) ($89.62, up 30.3% YTD): Analysts expect the supplier of construction materials including cement, concrete and steel to report a loss of 63 cents a share after the closing bell on April 2. The stock set a new multiyear intraday high at $89.94 on Monday. The weekly chart is positive but overbought with its five-week MMA at $84.24. Monday and semiannual value levels are $81.19, $62.89 and $59.01 with quarterly and weekly risky levels at $92.38 and $94.32.

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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