Must-See Charts-- How to Trade Comcast After Earnings Monday

NEW YORK (TheStreet) -- Shares of Comcast (CMCSA) traded to an all-time intraday high of $60.85 on April 23 just before the company withdrew its offer to buy Time Warner Cable (TWC). Comcast will report its quarterly results before the opening bell on Monday and analysts expect the company to earn 74 cents a share for its quarter ended in March.

Let's look at the daily and weekly charts for Comcast and provide the key technical levels at which to buy on weakness and the key technical levels at which to sell on strength.

Investors not familiar with technical analysis should begin with the notion that a price chart for a stock shows a road map of past price performance, which provides guidance for predicting future share price direction.

Here's how to read a daily chart. There are two moving averages to follow -- the 50-day simple moving average is in blue while the 200-day simple moving average is in green.

Here's how to read a weekly chart. This chart shows weekly price bars going back to the beginning of 2007 and thus includes the Crash of 2008, then the current bull market for stocks that began in March 2009. The red line tracks the ups and downs of the key weekly moving average. The green line is the 200-week simple moving average. The red line that oscillates along the bottom of the chart is the momentum reading on a scale of 00.00 to 100.00. A reading below 20.00 is oversold and a reading above 80.00 is overbought.

A technically positive weekly chart occurs when a stock ends a week above its key weekly moving average with the momentum reading rising above 20.00.

A technically negative weekly chart occurs when a stock ends a week below its key weekly moving average with the momentum reading declining below 80.00.

Here's the daily chart for Comcast.


Courtesy of MetaStock Xenith

Comcast had a close of $58.41 on Friday, up just 0.7% year to date and is 11% above its 2015 low of $52.45 set on Feb. 2.

The stock has been tracking its 200-day simple moving average higher since testing this average of $38.86 back on June 21, 2013. Subsequent tests provided additional buying opportunities at $47.95 on April 15, 2014, at $52.85 between Oct. 2 and Nov. 12 and at $54.18 between Jan. 29 and Feb. 3. The stock ended last week below its 50-day simple moving average of $58.76 and above its 200-day simple moving average of $56.06.

Here's the weekly chart for Comcast.


Courtesy of MetaStock Xenith

The weekly chart for Comcast is technically negative with the stock below its key weekly moving average of $58.58 with its momentum reading of 74.30 down from 76.31 a week ago. The 200-week simple moving average of $41.65 is the longer-term uptrend and the "reversion to the mean" last tested at $19.55 during the week of Oct. 22, 2010.

Investors looking to buy Comcast should place a good till canceled limit order to purchase the stock if it drops to the $43.44 to $39.12 range, which are key levels on technical charts until the end of the year.

Investors looking to book profits should place a good till canceled limit order to sell the stock into the $61.86 to $62.06 range, which are key levels on technical charts until the end of June.

 

  This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.

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