How to Trade Earnings for Best Buy, Dollar Tree, NetApp and 4 Others

NEW YORK (TheStreet) - Today we crunch the numbers on two companies that will report their quarterly earnings after the closing bell on Wednesday and five that will report before the opening bell on Thursday. All seven are down year to date, four by double-digit percentages.

The profiles below provide trading guidelines for the stocks in two "crunching the numbers" tables that follow. Note that there's a lot of red in the first table as these stocks are below most of their five key moving averages.

Best Buy (BBY) ($24.66) down 38% year to date. Analysts expect the retailer of televisions, computers and other electronics plus appliances to report earnings per share of 19 cents after the opening bell on Thursday. The stock crashed below its 200-day simple moving average on Jan. 16, setting a 2014 low at $22.15 on Jan.31, and has moved sideways since then, staying well below its 200-day SMA now at $33.07.

The weekly chart shifts to positive given a close this week above its five-week modified moving average at $25.64 with its 200-week SMA at $27.46. A semiannual value level is $18.95 with a semiannual pivot at $24.92 and quarterly and monthly risky levels at $27.36 and $28.26, respectively.

Buckle (BKE) ($45.31) down 12% year to date. Analysts expect the clothing retailer to report EPS of 78 cents before the opening bell on Thursday. The stock broke below its 200-day SMA on Jan. 8, trading down to a 2014 intraday low at $41.45 on Feb. 5. It rebounded to a test of its 200-day SMA now at $48.19 on May 12 through May 15.

The weekly chart shifts to positive with a close this week above its five-week MMA at $46.01 with its 200-week SMA at $42.49, which held twice this year. A weekly value level is $44.92 with a quarterly pivot at $46.88 and semiannual risky levels at $50.86 and $58.52.

Dollar Tree (DLTR) ($51.12) down 9.4% year to date. Analysts expect the discount chain to report EPS of 67 cents before the opening bell on Thursday. The stock has been below its 200-day SMA at $54.59 since March 17, trading as low as $50.15 on April 15.

The weekly chart shifts to positive given a close this week above its five-week MMA at $51.97. A weekly value level is $50.87 with quarterly and monthly risky levels at $54.95 and $56.02, respectively.

L Brands (LB) ($55.50) down 8.6% year to date. Analysts expect the retailer of intimate apparel and beauty products at stores such as Victoria's Secret to report EPS of 51 cents after the closing bell on Wednesday. The stock set an all-time intraday high at $65.95 on Dec.2, and crashed to as low as $49.86 on Feb. 3. It has since been trading back and forth around its 200-day SMA now at $57.67, failing there since May 13.

The weekly chart shifts to positive with a close this week above its five-week MMA at $55.87. Weekly and quarterly value levels are $53.26 and $46.39, respectively, with a monthly risky level at $69.69.

NetApp (NTAP) ($33.95) down 18% year to date. Analysts expect the provider of data-storage devices to report EPS of 62 cents after the closing bell on Wednesday. The stock has been below its 200-day SMA since March 5, and traded as low as $33.34 on May 7, well below the 200-day SMA now at $40.05.

The weekly chart is negative but oversold with its five-week MMA at $35.38. Weekly and quarterly value levels are $32.80 and $28.06, respectively, with an annual pivot at $34.67 and monthly and annual risky levels at $37.28 and $44.03, respectively.

Children's Place (PLCE) ($46.83) down 18% year to date. Analysts expect the retailer of apparel for children to report EPS of 61 cents before the opening bell on Thursday. The stock has been below its 200-day SMA since March 6, trading as low as $44.54 on May 7, which was well below its 200-day SMA, now at $53.05.

The weekly chart is negative but oversold with its five-week MMA at $48.45 and its 200-week SMA at $50.08. Weekly and annual values are $44.47 and $40.61, respectively, with annual and quarterly risky levels at $51.32 and $52.37, respectively.

Toro (TTC) ($62.55) down 1.7% year to date. Analysts expect the lawn-mower maker to report EPS of $1.45 before the opening bell on Thursday. The stock set an all-time intraday high at $67.35 on March 11, and drifted sideways to down to as low as $61.34 on May 15, which was still above its 200-day SMA at $60.05.

The weekly chart is negative with its five-week MMA at $63.47. Weekly and semiannual value levels are $61.37 and $61.20, respectively, with quarterly and monthly risky levels at $65.70 and $71.25, respectively.

Your investment policy among these stocks depends on whether or not you are a buyer on weakness or a seller of strength. We advocate using a good-'til-cancelled limit order to buy weakness to a value level or to sell strength to a risky level.

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.

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.

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

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.

>>Read More: 5 Enterprising Companies for Enterprising Investors

>>Read More: Don't Even Think About Selling Facebook

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

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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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