How to Trade Tiffany Before Earnings, Holiday-Shopping Season

 NEW YORK (TheStreet) -- Shares of luxury retailer Tiffany (TIF)  are challenging their all-time high going into Tuesday's earnings report, up 21% from Oct. 21.

Analysts expect Tiffany to post earnings of 77 cents a share. The stock was trading at $103.94, up 3 cents, on Monday morning.

A year ago, the stock rallied 16% from $81.07 on Nov. 26, 2013 to $93.64 into Jan. 2 on post-earnings momentum. On Jan.13, the luxury jeweler announced an upbeat report for 2013 holiday sales, but the good news was already priced in and the shares fell to a test of their 200-day simple moving average of $80.25 on Feb. 3, which proved to be a buying opportunity.

A strong earnings report on May 21 fueled an 8.5% gap higher from $88.23 on May 20 to $95.77 on May 21, and a momentum run-up led to an all-time intraday high at $105.66 on Aug. 27, up 20% from May 20. Investors, however, were poised to book profits, and the stock fell to $85.69 on Oct. 15.

As for trading the stock now, investors should book profits by entering a good ‘til canceled limit order to sell on strength at a key technical level of $105.15 and place a sell-stop order below the stock's key weekly moving average at $98.73, keeping in mind that the average will be rising each week. If you are looking to buy Tiffany on weakness, enter a good 'til canceled limit order to buy at a key technical level of $77.85.

Here's the daily chart for Tiffany.

Courtesy of MetaStock Xenith

The daily chart for Tiffany ($103.91) shows that the stock's run-up in 2013 began when it broke out above its 200-day SMA (green line) at $60.35 on Jan. 14, 2013. The run had its ups and downs as shown, leading to the all-time intraday high at $105.66 set on Aug. 27. Then came jolts of volatility to the low at $85.69 on Oct.15, and to the high of $105.24 on Nov. 21.

Here's the weekly chart for Tiffany.

Courtesy of MetaStock Xenith

The weekly chart for Tiffany shows that the 200-week SMA (green line) was the staging area from which the longer-term momentum run began when this average was $39.32 in September 2010.

Note that the correction shown from July 2011 into June 2012 stayed above the 200-week SMA, keeping the momentum run in place.

The weekly chart is positive with its key weekly moving average at $98.73. The momentum reading shown in red at the bottom of the graph is rising with a reading of $58.45, up from $47.21 a week ago.

At the time of publication, the author held no positions in the stock mentioned.

Follow @Suttmeier

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

 


TheStreet Ratings team rates TIFFANY & CO as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate TIFFANY & CO (TIF) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its increase in net income, revenue growth, expanding profit margins, largely solid financial position with reasonable debt levels by most measures and solid stock price performance. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity."

You can view the full analysis from the report here: TIF Ratings Report

More from Opinion

Breaking: Bill Cosby Found Guilty on All Counts in Sexual Assault Retrial

Breaking: Bill Cosby Found Guilty on All Counts in Sexual Assault Retrial

Earnings Season Is Simply Out of Control Madness - How Are You Surviving?

Earnings Season Is Simply Out of Control Madness - How Are You Surviving?

Why Ether and Ripple -- But Not Bitcoin -- Prices Might Come Under Pressure Soon

Why Ether and Ripple -- But Not Bitcoin -- Prices Might Come Under Pressure Soon

Daily Chatter: Here's Where the Markets Stand After Tuesday's Beating

Daily Chatter: Here's Where the Markets Stand After Tuesday's Beating

3 New Investing Myths That Must Be Busted

3 New Investing Myths That Must Be Busted