Homebuilder Hovnanian, 4 Others That Are Reporting Face More Volatility

NEW YORK (TheStreet) - Today we crunch the numbers on a fiber-optics company, a food retailer of almost all types of nuts, a homebuilder, a provider of electronic-payment systems and a retailer of accessories for women.

The companies report their quarterly earnings reports before the opening bell on Wednesday through the closing bell on Thursday as earnings season winds down.

Three of the stocks are up between 10% and 26% year to date with two down between 22% and 30%. Because of this volatility, it is important that investors are aware of the five moving averages and stochastics we show in the first "crunching the numbers" table, and value and risky levels presented in the second table.

Ciena  (CIEN) ($18.65), down 22% year to date. Analysts expect the company to report earnings per share of 3 cents before the opening bell on Thursday. The stock has been below its 200-day simple moving average now at $22.80 since April 4, trading as low as $18 on May 7.

The weekly chart is negative but oversold its five-week modified moving average at $19.82 and its 200-week SMA at $18.05 which held at the low. This week's value level is $17.41 with a monthly pivot at $19.13 and quarterly and semiannual risky levels at $22.81 and $23.09, respectively.

Diamond Foods (DMND) ($31.99), up 24% year to date. Analysts expect the retailer of nuts from almonds to walnuts to report EPS of 16 cents after the closing bell on Thursday. This stock was trading above $90 back in September 2011 and then got crushed, falling to as low as $12.85 on Nov. 21, 2012. It has been above its 200-day SMA since June 10, 2013. Diamond set a multiyear intraday high at $35.58 on March 31, well above the 200-day SMA now at $26.58.

The weekly chart is neutral with its five-week MMA at $31.41 and its 200-week SMA at $34.35 which provided resistance in early-April. Weekly and quarterly value levels are $29.44 and $23.22, respectively, with semiannual and monthly risky levels at $32.64 and $34.11, respectively.

Hovnanian (HOV) ($4.63), down 30% year to date. Analysts expect the homebuilder to report EPS of a penny before the opening bell on Wednesday. The stock traded as high as $6.80 on Jan. 3, and has been below its 200-day SMA now at $5.22 since March 5.

The weekly chart shifts to positive given a close this week above its five-week MMA at $4.68 as the 200-week SMA at $3.93 is a major support. This week's value level is $4.31 with semiannual and monthly risky levels at $5.13 and $5.32.

Verifone Systems (PAY) ($33.87), up 26% year to date. Analysts expect the electronics- payment company to report EPS of 21 cents after the closing bell on Thursday. The stock has been above its 200-day SMA since Oct. 18 with this average now at $27.24 and the 2014 intraday high at $35.38 on May 13.

The weekly chart shifts to positive given a close this week above its five-week MMA at $32.87 and its 200-week SMA at $33.89 as support. A weekly value level is $32.24 with monthly and quarterly risky levels at $36.24 and $43.75, respectively.

Vera Bradley (VRA) ($26.45), up 10% year to date. Analysts expect the retailer of women's accessories to report EPS of 13 cents before the opening bell on Thursday. The stock has been above its 200-day SMA since Dec. 16 with that average now at $24.33 and the 2014 intraday high at $30 set on May 8.

The weekly chart is negative with its five-week MMA at $27.23. Annual value levels are $24.86 and $19.48 with weekly and monthly risky levels at $27.58 and $30.80, 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.

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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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