Position Yourself for the Earnings Deluge: Netflix, McDonald's, United Technologies, More

NEW YORK (TheStreet) -- The earnings floodgate opens today -- this week there is deluge of earnings reports. We will be crunching the numbers on more than 60 companies that report quarterly earnings today through Friday.

When we profile stocks pre-earnings, we include two "Crunching the Numbers" tables. The first table covers the technicals and the second table covers analysts' estimates and our value levels, pivots and risky levels.

Let's start with individual profiles then get into the tables that follow.


Harley Davidson (HOG) ($66.64, down 3.8% YTD): Analysts expect the maker of iconic motorcycles to report earnings per share of $1.08 before the opening bell on April 22. The stock traded to a multiyear intraday high at $70.04 on Jan. 9, then traded as low as $60.55 on Feb. 3, holding its 200-day simple moving average. Harley then rebounded as high as $69.60 on April 4 as a potential double-top in 2014. On April 15, the stock held its 200-day SMA at $64.10.

The weekly chart shifts to negative given a close this week below its five-week modified moving average at $66.53. Our quarterly value level was a pivot last week at $64.64. Investors already had opportunities to sell strength to our semiannual risky levels at $68.36 and $69.16.

Lockheed Martin (LMT) ($160.25, up 7.8% YTD): Analysts expect the defense company to report earnings of $2.52 per share before the opening bell on April 22. The stock traded to an all-time intraday high at $168.41 on Feb. 24, and then its parabolic bubble began to pop -- trading as low as $153.54 on April 11.

The weekly chart shifts to negative given a close this week below its five-week MMA at $158.43. This chart clearing shows the parabolic rise for this stock began in March 2013. Weekly and quarterly value levels are $156.37 and $150.23, with a monthly risky level at $171.73.

McDonald's (MCD) ($100.25, up 3.3% YTD): Analysts expect the maker of the Big Mac -- and Dow component -- to report earnings of $1.23 before the opening bell on April 22. After setting an all-time intraday high at $103.70 on April 12, 2013, the stock traded as low as $92.22 on Feb. 5 of this year. McDonald's has been trading back and forth around its 200-day SMA since Aug. 14, with this average now at $96.58.

The weekly chart is positive, with its five-week MMA at $97.70. The 200-week SMA is $89.39 and the stock has been above this key level since February 2004. Weekly and monthly value levels are $98.79 and $94.56, with annual and semiannual risky levels at $106.59 and $111.95.

Netflix (NFLX) ($345.74, down 6.1% YTD): Analysts expect the online movie rental company to report earnings of 83 cents a share after the closing bell on April 21. The stock set an all-time intraday high at $458.00 on March 6. Then it lost its momentum status, trading as low as $312.10 on April 15, which was below its 200-day SMA at $338.70.

The weekly chart is negative, with its five-week MMA at $371.48. The chart pattern clearly shows a bubble that has popped. The stock traded below our quarterly and semiannual value levels at $328.81 and $328.21 last week. This week's pivot is $331.96, with a monthly risky level at $468.54. If the stock breaks below the value levels, the risk is to $272.38 by the end of June and to $242.14 by year end.

Travelers (TRV) ($86.68, down 4.3% YTD): Analysts expect the insurance giant and Dow component to report earnings of $2.13 a share before the opening bell on April 22. The stock set an all-time intraday high at $91.68 on Nov. 29, then traded as low as $80.05 on Feb. 3. Travelers has been trading back and forth around its 200-day SMA, now at $84.81 since Jan. 21.

The weekly chart is positive, with its five-week MMA at $84.85. This week's value level is $85.56, with a monthly pivot at $87.02 and semiannual risky levels at $87.51 and $87.73. These risky levels began the year as value levels that failed to hold following a negative reaction to earnings on Jan. 21.

United Technologies (UTX) ($118.57, up 4.2% YTD): Analysts expect the parent of Pratt & Whitney Aircraft, Carrier Hearing & Air Conditioning, Otis Elevator and Sikorsky Helicopters -- and Dow component -- to report earnings of $1.27 a share before the opening bell on April 22. The stock saw an all-time intraday high at $120.00 on April 3, then traded as low as $113.54 on April 11. It has been above its 200-day SMA since Nov. 27.

The weekly chart shifts to negative given a close this week below its five-week MMA at $115.65. Semiannual and quarterly value levels are $112.24 and $112.06, with a weekly pivot at $117.44.


Crunching the Numbers with Richard Suttmeier: Moving Averages & Stochastics

This table provides the technical status for the stocks profiled in today's report.

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 are listed in red.

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.)


Crunching the Numbers with Richard Suttmeier: Earnings & Where to Buy and Sell

This table presents the EPS estimates, including date and before or after the close, and where to buy on weakness and where to sell on strength.

EPS Date is the day the company reports their quarterly results.

EPS Estimate is the earnings per share estimate from Wall Street analysts.

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.

Note: 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.

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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