May New-Home Sales Report Sets Earnings Table for Lennar, KB Home

NEW YORK (TheStreet) -- Better-than-expected May sales of news homes, which were reported on Tuesday, set the earnings table for Lennar (LEN) before the opening bell on Thursday and for KB Home (KBH) before the opening bell on Friday.

Six other companies reporting before the end of the week have a consumer flavor, from home goods to food products, seasonings to office furniture and sneakers to recreational vehicles. The earnings reports put the focus on consumers following the Conference Board's release of consumer confidence on Tuesday, which showed a rise to 85.2 in June.

According the Commerce Department, new-home sales in May rose to an annual rate of 504,000, much stronger than expected, although the sales represent just 10% of U.S. home buying as home sales involve existing homes.

And although consumer confidence may be at its highest level in five years, it remains below its neutral range of 90 to 110 last seen in 2007.

The consumer is the key to the economic recovery, and so the quarterly results reported by the eight companies profiled today will be an important gauge.

Here are the eight profiles and two "crunching the numbers" tables follow.

Bed, Bath & Beyond (BBBY) ($60.64) is down 25% year to date. Analysts expect the retailer to report earnings per share of 95 cents after the closing bell on Wednesday. The stock traded as low as $59.89 on June 20, and has been below its 200-day simple moving average at $69.87 since Jan. 9.

The weekly chart is negative but oversold with its five-week modified moving average at $61.57 and its 200-week SMA at $61.46. Monthly and annual value levels are $56.98 and $51.50, respectively, with a weekly pivot at $60.08, and annual and quarterly risky levels at $64.99 and $72.27, respectively.

ConAgra Foods (CAG) ($28.82) is down 15% year to date. Analysts expect the company to report EPS of 57 cents before the opening bell on Thursday. The stock traded as high as $32.85 on June 17, and as low as $28.67 on June 20 on an earnings warning. It is below its 200-day SMA at $31.40.

The weekly chart is negative with its five-week MMA at $30.68 and its 200-week SMA at $28.05. An annual value level is $22.10 with weekly and annual risky levels at $31.36 and $32.01, respectively.

KB Home ($17.64) is down 3.5% year to date. Analysts expect the homebuilder to report EPS of 21 cents before the opening bell on Friday. The stock traded above its 200-day SMA at $17.42 on the new-home-sales report, as it went as high as $18.04 on Tuesday.

The weekly chart is positive with its five-week MMA at $17.00 and its 200-week SMA at $13.78. Weekly and semiannual value levels are $17.31 and $13.79, respectively, with a semiannual pivot at $17.76 and monthly and quarterly risky levels at $18.64 and $25.60, respectively.

Lennar ($41.05) is up 3.8% year to date. Analysts expect the homebuilder to report EPS of 51 cents before the opening bell on Thursday. The stock traded as high as $41.69 on Tuesday, well above its 200-day SMA at $38.12.

The weekly chart is positive with its five-week MMA at $40.40 and its 200-week SMA at $28.88. Weekly and semiannual risky levels are $42.05 and $44.34, respectively.

McCormick (MKC) ($71.30) is up 3.5% year to date. Analysts expect the spice maker to report EPS of 62 cents before the opening bell on Thursday. The stock traded as high as $73.33 on June 9, and is above its 200-day SMA at $68.86.

The weekly chart shifts to negative on a close this week below its five-week MMA at $71.50. Monthly and annual value levels are $70.86 and $67.07, respectively, with weekly and quarterly risky levels at $72.66 and $77.59, respectively.

Herman Miller (MLHR) ($31.27) is up 5.9% year to date. Analysts expect the furniture maker to report EPS of 46 cents after the closing bell on Wednesday. The stock set a multiyear intraday high at $32.72 on June 6, and is well above its 200-day SMA at $29.69.

The weekly chart shifts to negative on a close this week below its five-week MMA at $31.27. Annual value levels are $21.60 and $21.53 with a monthly pivot at $31.13 and semiannual risky levels at $32.04 and $32.37.

Nike  (NKE) ($74.98) is down 4.7% year to date. Analysts expect the company to report EPS of 76 cents after the closing bell on Thursday. The stock has been trading back and forth around its 200-day SMA, now at $74.96, since April 7.

The weekly chart is neutral with its five-week MMA at $74.99 with rising stochastics. Semiannual and annual value levels are $74.10 and $69.56, respectively, with monthly and weekly risky levels at $76.69 and $77.52, respectively.

Winnebago (WGO) ($23.04) is down 16% year to date. Analysts expect the motor-home maker to report EPS of 41 cents before the opening bell on Thursday. The stock has been below its 200-day SMA at $26.42 since April 10.

The weekly chart is negative with its five-week MMA at $24.05. Monthly and semiannual value levels are $22.23 and $19.39, respectively, with a weekly pivot at $23.60 and semiannual and quarterly risky levels at $24.82 and $34.39, 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 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.

Before / After is whether or not the company reports before the opening bell or after the closing b ell.

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.

Follow @Suttmeier

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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