NEW YORK (TheStreet) -- Investors who live in the lap of luxury are likely to own the branded apparel and accessories made by Michael Kors (KORS), the designer watches from Movado (MOV), and the jewelry and diamonds retailed by Tiffany (TIF). But investors in shares in these luxury retailers must also manage the volatility that typically follows earnings reports from these companies.
All three reported their quarterly results on May 27. Two had downside volatility and one moved higher. Knowing how to trade shares of companies following earnings volatility is important for investors who want to sell strength or to buy weakness.
Here's an earnings scorecard for the three luxury retailers, followed by daily charts and the key trading levels for buyers and sellers of these stocks.
Michael Kors had a close of $45.78 on Thursday, down 39% year to date and 55% below its all-time intraday high of $101.04 set on Feb. 25, 2014. The company became a publicly-traded stock back in Dec 2011 and traded as low as $23.51 on Dec. 16, 2011. Kors was trading flat midday Friday.
The weekly chart is negative but oversold with the stock below its key moving average of $59.79. The momentum reading of 11.28 is well below the oversold threshold of 20.00.
Here's the daily chart for Michael Kors.
Courtesy of MetaStock Xenith
Shares of Michael Kors tracked the 200-day simple moving average higher until this average failed to hold at $86.81 on July 11, 2014. The stock popped 21% from a close of $76.67 on Feb. 3, 2014, to $93 at the open on Feb. 4, 2014, on a positive reaction to earnings. This reaction powered the stock to its all-time intraday high of $101.04 on Feb. 26, 2014.
The stock gapped lower by 3.5% from a close of $85.67 on July 14 to an open of $82.69 on July 15 on an analyst downgrade by Maxim on concerns about the retailer's aggressive growth plans.
Note that you can draw a circle between these two gaps and above the high in what technicians call an "island reversal." This was followed by a "death cross," confirmed on August 8, when the 50-day simple moving average declined below the 200-day simple moving average.
The price gap lower on the far right totaled 18% from a close of $60.59 on May 26 to the open of $49.50 on May 27. Technicians call gap a "falling knife". The stock is well below its 50-day and 200-day simple moving averages off $62.82 and $70.72.
Investors looking to buy Michael Kors should place a good till canceled limit order to purchase the stock if it drops to $44.48, which is a key level on technical charts until the end of next week.
Investors looking to reduce holdings should place a good till canceled limit order to sell the stock if it rises to $52.13, which is a key level on technical charts until the end of the year.