Micron, Sonic, Walgreen: How to Trade Their Stocks Before They Report Earnings

NEW YORK (TheStreet) -- Barnes & Noble (BKS), Walgreens (WAG) and Micron Technology (MU) are among the companies reporting earnings this week. Today we'll look at how to trade their stocks and the shares of four other companies that also plan to release quarterly results.

The common thread among all of these companies is that their shares are up year to date.

Can Barnes & Noble hold onto a 38% gain despite continued quarterly losses? Can Micron Tech (MU) stretch a 46% gain on the momentum in the semiconductor industry? Drugstore giant Walgreens (WAG) has a gain of 30% so far in 2014.

Here are the seven profiles. Two "Crunching the Numbers" tables follow.

Apollo Group (APOL) ($29.39), up 7.6% year to date. Analysts expect the online education company to report earnings per share of 65 cents before the opening bell on Wednesday. The stock traded as high as $35.92 on Jan. 22 then traded as low as $26.05 on May 22 and is now above its 200-day simple moving average at $27.86.

The weekly chart is positive with its five-week modified moving average at $28.60 and its 200-week SMA at $33.40. Weekly and semiannual value levels are $28.96 and $23.25, respectively, with annual and monthly risky levels at $31.82 and $32.33, respectively.

Barnes & Noble ($20.70), up 38% year to date. Analysts expect the retailer of books and the Nook e-reader to report a loss of 63 cents a share before the opening bell on Wednesday. The stock traded as high as $22.41 on March 17 then traded as low as $15.45 on May 7, which was below its 200-day SMA now at $16.36.

The weekly chart is positive with its five-week MMA at $18.87 and 200-week SMA at $15.23. Quarterly and annual value levels are $16.89 and $15.26, respectively, with a semiannual pivot at $20.54 and monthly risky level at $21.61.

General Mills (GIS) ($54.64), up 9.5% year to date. Analysts expect the packaged consumer foods company to report EPS of 71 cents before the opening bell on Wednesday. The stock traded to an all-time intraday high at $55.64, well above its 200-day SMA at $50.65.

The weekly chart is positive with its five-week MMA at $53.91. Monthly and annual value levels are $53.86 and $49.47, respectively, with a semiannual pivot at $54.08 and weekly and quarterly risky levels at $56.50 and $59.04, respectively.

Monsanto (MON) ($122.08), up 4.7% year to date. Analysts expect the agricultural basic materials company to report EPS of $1.56 before the opening bell on Wednesday. The stock set a multiyear intraday high at $122.81 on June 2 and is well above its 200-day SMA at $111.44.

The weekly chart is positive but overbought with its five-week MMA at $118.58. A semiannual value level is $91.34 with annual risky levels at $123.36 and $131.26.

General Mills and Monsanto were two of Jim Cramer's Top Picks on Friday week. 

Micron Technology ($31.85), up 46% year to date. Analysts expect the company to report EPS of 71 cents after the closing bell on Monday. The stock set a multiyear intraday high at $32.43 on June 18 and is well above its 200-day SMA at $22.59.

The weekly chart is positive but overbought with its five-week MMA at $28.46. Quarterly and semiannual value levels are $28.92 and $20.30, respectively, with weekly and monthly risky levels at $32.04 and $32.87, respectively.

Richard Saintvilus, a fellow contributor to TheStreet, projects 30% upside for Micron

Sonic (SONC) ($22.40), up 11% year to date. Analysts expect the hamburger chain on skates to report EPS of 29 cents after the closing bell on Monday. The stock set a multiyear intraday high at $23.56 on March 26 then traded as low as $18.61 on May 1 dipping below its 200-day SMA now at $19.86.

The weekly chart is positive with its five-week MMA at $21.29. Monthly and semiannual value levels are $21.63 and $20.27, respectively, with a weekly pivot at $22.11 and quarterly risky level at $23.82.

Walgreen ($74.54), up 30% year to date. Analysts expect the drug store giant to report EPS of 94 cents before the opening bell on Tuesday. The stock set an all-time intraday high at $76.39 on June 19 well above its 200-day SMA at $62.40.

The weekly chart is positive but overbought with its five-week MMA at $71.19. Monthly and semiannual value levels are $73.77 and $69.02, respectively, with weekly and quarterly risky levels at $76.97 and $79.75, respectively.

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 a reading of 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 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 level and as a "reversion to the mean" over a rolling three- to five-year horizon. (Even Apple (AAPL) 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 level, 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 & 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 its quarterly results.

"EPS Estimate" is the EPS 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-'til-canceled 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

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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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