Technical/Fundamental Analysis of Earnings plays for week of Dec
15/19.
Before discussing the TA on the earnings plays, I have run
scanned the market to find the stocks that have the following
criteria. (Stocks may be filtered a few times to find the few
with these criteria)
FUNDAMENTAL CRITERIA:
1. 12-month earnings per share growth in top 10% of all stocks,
2. Most recent quarterly EPS in top 10% of stocks, then
3. Finally, top 20 stocks for expected 50+ percent EPS growth in
the next fiscal year.
4. Velocity, Acceleration in 90th percentile of all stocks.
5. Return on Equity at least 15%
6. Price/Earnings, Price/Cash Flow, Price/Book, Revenue, Sales,
Debt/Equity etc in upper 85th percentile (at least 3 of these).
7. Upward changes in last WEEK of either ERG, Price rank, EPS
rank,Accumulation/Distribution Rank
8. Analysts upward revision of earnings in last week, and/or 30
days.
9. Insider rank 85th percentile (usually you don't find that many
insiders holding shares in the company, when I do they become
highly preferred trades)
10. Accumulation/Distribution 70+
After I pick out what's left over I look for 3 things that are
important for me in technical analysis to time entry points if I decide to enter any of these earnings plays:
TECHNICAL CRITERIA:
HIGH VOLUME that rises alongside with Prices.. and even better,
strong volume that increases every day and prices that are
hesitant a day before earnings, suggesting a tug of war between
bulls and bears.
DAILY RANGE: I check that the stock closes at 75% of the range it
had during the day. The 5 day average of the percent daily range
is 75%.
The 1/30, 1/30 ratio volume is over 150% of 30 day average
volume. (i.e. The most recent day's volume is 150% higher than
the 30 day average volume).
For other volume results I use 1 of these volume oscillators from
Metastock 6.
MARKET FACILITATION INDEX
I use an indicator that I like called the MFI.. Market
Facilitation Index which is really easy. It's like
a speedometer for price movement through time. What that gives
you is the amount of price change for every tick in the market You get it by dividing the range by the volume,so if the price
change is more than the MFI is more we are moving through the
market quickly.. we combine this with raw volume and you get a trend (Metastock has this indicator)
KLINGER VOLUME OSCILLATOR:
which is a way to identify SHORT TERM trading opportunities by
signals tops and bottoms by accurately relfecting the flow of money into and out of a security and showing any divergences
between price lows and volume. (see Metastock 6.5 and Technical
Analysis of Stocks and
commodities December 1997)
This together with RSI, Money Flow Index and/or Moving Average
Breakout. Mainly looking for breakouts, whether they are stochastic, Wilder or Momentum..
SOME OF THE STOCKS TO WATCH THIS WEEK:
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CAG
Conagra..
The most recently confirmed resistance level was at 33.42. With
the current price above this level at 38.00, resistance would be the high of 38.75. CONAGRA is currently 16.9% above its 200-day moving average and is in looks to be still uptrending. Volatility is low as compared to the average volatility over the last 90 days. Money is flowing into the company, because of it's nearly overbought situation I would not want to do
more than a daytrade. especially since volume on Friday was 36%
less than average volume,suggesting perhaps that interest might be fading on this company.. Only earnings might give it the jolt it needs.
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AGE:
AGE has given me a buy signal and I will buy if the price hits
35.50.
On 12/12/97, AG EDWARDS closed up 0.3120 at 35.3120 on volume
50.06% below average.
The close is currently Above it's 200 period moving average.
The close is currently Above it's 90 period moving average.
The close is currently Above it's 30 period moving average.
____________
WSTF:
On 12/12/97, WSTF closed down -0.8750 at 16.2500 on volume 37.55%
above average. WSTF
is currently 30.2% above its 200-day moving average Volume is
higher than average but the
price is not rising as quickly.If the price movement or trend
stalls and earnings come out (as it did in BKE)
means that it could rise above resistance of 17 continued mean a
genuine breakout and major
uptrend ensue.
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BMET:
BMET is currently 18.6% above its 200-day moving average and is
in a kind of flat. Volatility is
very low as compared to the average volatility over the last 90
days. But the Money flow indicator
and accumulation/distributions shows that money is flowing into
it. BIOMET appears to have
confirmed downside support around 23.54.
_____________
CON:
already a BUY signal generated I got in on Friday. CON has been
in a primary buy mode for 5
days.
CON is currently 50.7% above its 200-day moving average and is in
a moderate upward trend.
Volatility is very low as compared to the average volatility over
the last 90 days. Again money is
flowing in and its now above its 30, 90 and 200 period moving
average.
_________
TSCC:
already generated BUY signal on Thursday. Restance was at 27 7/8
and now it becomes
support.
TSCC is currently 19.0% above its 200-day moving average and is
in a still flat. Volatility is
relatively normal as compared to the average volatility over the
last 90 days. Again it is waiting
for eranings to create the "pop" in needs to overcome resistance
__________
DF:
DEAN FOODS is currently 24.9% above its 200-day moving average
trending upward
moderately. MFI is rising but the volume is stabilizing which you
can see when on 12/12/97,
DEAN FOODS closed up 0.0620 at 53.9370 on volume 64.32% below
average. This can mean
that
DF is out of steam so I'll wait and see what happens.
_____________
DFF:
DOMINICKS FINE FOODS is currently 39.9% above its 200-period
moving average and is in an
upward trend. Volatility is extremely low. Our trend lots of
indicators are bullish on this company
and on 12/12/97 the price closing price was 39.7500. Could be
that the earnings should follow
with an increase in price. I like this one because the volume is
increasing and the price has
stalled, perhaps waiting for earnings to bring the nice increase
in prices.
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RXSD:
The current REXALL SUNDOWN chart looks very good. On 12/12/97,
REXALL SUNDOWN
closed up 0.8130 at 25.1250 on volume 21.09% above average. We've
got an increase in
volume and price. This is a continuing trend and I'm looking to
get in tomorrow above 25.25.
Currently the MACD is bullish since it is trading above its
signal line.The MACD looks good and
it broke out about 11 days ago.
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SJK:
On 12/12/97, ST JOHN KNITS closed down -0.1250 at 42.8750 on
volume 71.75% below
average. The price is currently between the most recently
confirmed support and resistance
levels.
The most recent support level was at 40.08. The most recent
resistance level was at about 54.
With the current price at 42.88, you may look for this previous
support level of 40.08 to again
provide downside support and the previous resistance level of
54.02 to again provide upside
resistance.
So far this is a purely Fundamental play and I did not get any
buy signal. There was one about 10 day ago though and the stock enjoyed upward momentum at that time. The current value for
the 14 day RSI is 64.8829,perhaps getting close to overbought.
Here again it is the earnings that can move this stock back again.
____________________
CCL:
CARNIVAL is currently 20.2% above its 200-day moving average and
is in a moderate upward trend. Volatility is high as compared to the average volatility over the last 90 days. Money is
flowing into this company but at a slow pace.
On 12/12/97, CARNIVAL closed down -0.4380 at 51.5620 on volume
4.78% below average.
CARNIVAL is currently 20.2% above its 200-day moving average and
is in a moderate upward trend. Volatility is high as compared to the average volatility over the last 90 days. The RSI has
just reached its lowest value in the last 14 session and that is
not good, but CCL should pick up because earnings are expected to be very good and it was up about 14 days ago 3 pointson that
alone. CCL is an opportunity for further price action to the
upside. This is one of my favorite plays this week.
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RAD
down on Friday. It still remains on my Watch List for any sign
of turnaround, but it obviously hasn't generated a buy as yet.
RITE AID is currently 22.4% above its 200-day moving average and it was trending upwardly.
Unfortunately for RAD a big black engulfing candle appeared
(gulp!) and appeared to swallow up the previous white candle. Since RAD has been pretty much on an uptrend until now this
could be bad news. Tomorrow will tell.
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RADAF:
RADICA GAMES is currently in a buy mode. RADICA GAMES has been in
a buy mode all month long.
RADICA GAMES is currently 118.2% above its 200-day moving average
and is in a steep upward trend. Volatility is very low as compared to the average volatility over the last 90 days.
The most recently confirmed support level was at 10.50. With the
current price above this level at 17.88, you may look for this previous support level of 10.50 to
again provide downside support.
Although RADAF is technically overbought earnings are coming out
on tuesday and they are expected to be very good. For those of
you you would like like RADAF for intermediate term, wait until AFTER earnings come out and for what might be a 'retreat' or downgrade on valuation. Otherwise RADAF might make for a very good daytrade for next few days and for the aggressive trader you
might want to take it home.
The close is currently Above it's 200 period moving average.
The close is currently Above it's 90 period moving average.
The close is currently Above it's 30 period moving average.
Currently, The Chande Momentum Oscillator is in an overbought
condition. |
