Krispy Kreme, Three Others Are Poised for More Volatility

NEW YORK (TheStreet) -- Today we crunch the numbers on two retailers and a doughnut chain that are set to report quarterly results after the closing bell Monday or before the opening bell on Tuesday. The fourth company is an alternative fuel company that reports after the closing bell on Tuesday.

Many stocks have been volatile year to date both before and after reporting quarterly results. Our profiles below and the crunching the numbers tables that follow will help investors navigate the volatility.

Dollar General (DG) ($53.78), down 11% year to date. Analysts expect the discount retailer to report earnings per share 73 cents before the opening bell on Tuesday. This EPS estimate is down 2 cents from last week. The stock has been extremely volatile, setting an all-time intraday high at $62.93 on Jan. 10, before going as low as $53 on Friday. The stock has been below its 200-day simple moving average at $57.51 since April 4.

The weekly chart is negative with its five-week modified moving average at $55.82 and its 200-week SMA at $44.58. An annual value level is $45.67 but if the stock can trade above this week's pivot at $54.25 the upside is to monthly and semiannual risky levels at $57.04 and $59.17, respectively.

FuelCell Energy (FCEL) ($2.34), up 66% year to date. Analysts expect the alternative-energy company to report a loss of 3 cents a share after the closing bell on Tuesday. This estimate is a penny better than last week's estimate for the company that provides renewable biogas and natural gas to power plants.

Talk above volatility: This stock traded at a multiyear intraday high at $4.74 on March 11 and thus is 50.6% below its high despite being up 66% year to date. The stock is above all five key moving averages in our first table.

The weekly chart shifts to positive given a close this week above its five-week MMA at $2.23 which justifies a buy as an "option on survival'. Invest knowing that the risk is that you could lose the entire amount of money invested. A weekly value level is $2.09 with a monthly risky level at $2.47.

Krispy Kreme (KKD) ($18.84), down 2.3% year to date. Analysts expect the doughnut chain to report EPS of 23 cents after the closing bell on Monday.

Krispy Kreme was a high-flyer going back to August 2003, setting an all-time intraday high at $49. Then the cream popped out of the stock's parabolic bubble with the stock trading as low as $1.01 in February 2009. The stock then surged to a multiyear intraday high at $26.63 on Nov. 21, before trading as low as $15.70 on Feb. 5. Krispy Kreme has been below its 200-day SMA at $19.99 since March 17.

The weekly chart is positive with its five-week MMA at $18.31. The stock has been trading back and forth around a semiannual pivot at $18.87 since 2014 began. Reflecting potential volatility our semiannual and annual value levels lag at $15.19 and $12.12, respectively, with weekly and monthly risky levels at $19.57 and $20.25, respectively.

Quiksilver (ZQK) ($5.95), down 32% year to date. Analysts expect the retailer of outdoor sports apparel, footwear and accessories to report a loss of 3 cents a share after the closing bell on Monday. The stock set a multiyear intraday high at $9.29 on Nov. 13, and has been trading sideways to down since then. Quiksilver has been below its 200-day SMA at $7.30 since April 7, trading as low as $5.58 on May 21.

A stock trading below $10 a share is not a portfolio candidate for many equity money managers. If the stock starts to trade below $5 a share, some broker-dealers will not allow investors to buy Quiksilver shares on margin.

The weekly chart is negative but oversold with its five-week MMA at $6.46 with its 200-week SMA at $5.03. A weekly value level is $5.29 with semiannual and monthly risky levels at $7.24 and $7.78, 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.

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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