A Technical Look at Three Software Companies Set to Report, Plus Microsoft

  NEW YORK (TheStreet) -- Three software companies -- Adobe (ADBE) , Oracle (ORCL) and Red Hat (RHT)  -- are scheduled to report quarterly earnings this week, reports that will provide a gauge of demand for software among businesses.


The following numbers should provide some trading guidelines for the stocks of the three vendors, plus Microsoft (MSFT)  , the leader in the industry, whose stock is up 25% year to date, the best performer in the Dow Jones Industrial Average.

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Adobe Systems ($70.98) gapped to an all-time intraday high at $74.69 on June 18 after reporting earnings that beat estimates on June 17. Since then, the stock has been trading sideways to down to as low as $67.57, filling the gap to the June 17 high of $68.

Adobe reports quarterly results after the closing bell on Tuesday. Analysts expect the company to post earnings of 13 cents per share. The stock is not cheap with a 12-month trailing price-to-earnings ratio at 101.4. The weekly chart has parabolic bubble characteristics and a close this week below its five-week modified moving average at $71.09 would be negative.

Failure to hold a weekly value level at $69.46 indicates risk to a semiannual value level at $62.44. Quarterly and monthly risky levels at $72.23 and $73.41, respectively, are below the all-time high.

Microsoft ($46.69) has become a momentum stock, trading at a multiyear intraday high of $47.02 on Friday. Investors tracking the stock's 50-day simple moving average could have bought the stock at $42.25 on Aug. 6.

The company has a 12-month trailing P/E of 18.2 and dividend yield of 2.4%. The weekly chart is positive but overbought with its five-week MMA at $44.78. Semiannual and quarterly value levels lag at $41.67 and $39.45, respectively, with a monthly pivot at $45.85.

Oracle ($40.50) set a multiyear intraday high of $43.19 on June 19, and reported earnings that missed estimates after the closing bell that day. The stock gapped below its 50-day SMA at $41.30 on June 20, and traded as low as $39.53 on Aug. 4. The stock ended last week below its 50-day now at $40.66.

The company reports quarterly results after the closing bell on Thursday; analysts expect it to post earnings of 60 cents per share. The stock has a 12-month trailing P/E of 14.6 and dividend yield of 1.2%. The weekly chart is neutral with its five-week MMA at $40.81 with rising 12x3x3 weekly slow stochastics.

Semiannual and annual value levels are $38.85 and $34.92, respectively, with a weekly pivot at $41.24 and annual and quarterly risky levels at $42.23 and $42.72, respectively.

Red Hat ($70.98) set a multiyear intraday high of $62.69 on Aug. 19. On June 18, the company reported better-than-expected earnings which fueled the upward momentum.

The company reports quarterly results after the closing bell on Thursday; analysts expect it to report earnings of 26 cents per share. The stock has an elevated 12-month P/E of 56.1. The weekly chart is positive but overbought with its five-week MMA at $59.25.

Annual and monthly value levels are $55.80 and $54.74, respectively, with semiannual and weekly risky levels at $63.86 and $64.89, respectively.

 

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