SODA is approaching a level of Support

October 28, 2013, 14:55 pm ET, BY Neal- Contributor| Editor: Thomas H. Kee Jr. (Follow on LinkedIn)

A few very important earnings releases are coming over the next few days.  We have conducted an analysis of these companies in order to provide investors with a summarized earnings analysis (both past and present), but also, and more importantly, a price-based observation that might be better suited for investors who are anticipating price action after earnings are released.

Of course, we already know that stocks sometimes do the exact opposite of what we might expect after earnings.  A stock might fall after it beats estimates, or increase after a miss, so although an evaluation of earnings data is clearly important, a close look at the recent decisions of smart money is as well.

This combination of simple earnings data and price-based analysis can help investors not only understand earnings results, but also anticipate the stock’s move after earnings are released.

The following Companies report earnings on October 30.

BorgWarner Inc. (NYSE:BWA) is scheduled to report earnings on Wednesday October 30 before the market open.  Analyst estimates are for the company to earn $1.33 per share, which would be a 15% increase over the same quarter a year ago.  Last quarter the company reported a record quarterly operating margin and diluted EPS of 12.9% and $1.50, respectively.  The company also announced a quarterly cash dividend of $0.25 per share in August, which is the first time it offered a dividend since 2009.  Shares of BorgWarner are up 48% YTD and trading near the 52-week highs.  Should investors be buying or selling BWA ahead of earnings?

According to the real-time trading report offered by Stock Traders Daily, shares of BWA recently bounced about 8% higher off support in the first week of October, and are now getting close to a test of resistance, and as a rule we are sellers if resistance is tested (it is not there yet).  If the stock does test long-term resistance, and remains below resistance, we would expect a full oscillation back to support. That means BWA is a sell/short at resistance.  However, resistance also acts as our risk control, and if resistance breaks higher, we would consider that a sign to exit any short positions. 

Comcast Corporation (NASDAQ:CMCSA) is scheduled to report $0.61 per share when the company reports on Wednesday October 30 before the market open, which would be a 33% increase from the same quarter a year ago.  Comcast and Twitter announced a strategic partnership, which will connect the millions of Twitter users with television viewing.  Comcast created a new feature called "See It" that will give millions of Xfinity TV customers the ability to instantly access TV shows, movies and sports directly from a Tweet. The new service option will debut in November with shows from NBCUniversal's networks.  Shares of Comcast are up 27% YTD, and up 14% over the last two months.  Should investors be taking profits in CMCSA ahead of earnings?

The stock is near all-time highs after making a big move higher over the last few months.  Most of the news on the company has been very positive, so it is important for investors to focus on price.  Right now, the stock is trading near long-term resistance.  According to rule, we are sellers at resistance, and as long as the stock remains below resistance we expect lower levels and a test of support. Based on the real-time trading report published by Stock Traders Daily, CMSCA is a sell/short at resistance, with risk controls in place if resistance breaks higher.

SPX Corporation (NYSE:SPW) is expected to report earnings of $1.25 per share for its third quarter when the company releases its earnings data on Wednesday October 30 before the market open, which would be a 19% increase of the $1.05 the company reported the same quarter a year ago.  Last month the company announced that its Flow Technology segment has been awarded two contracts worth a combined total of $40 million for ClydeUnion-branded pumps that will play a role in two offshore oil production platforms being constructed in the North Sea.   The stock is up 21% YTD, and up 14% in the last three months.  Is the stock a buy, sell or hold ahead of earnings? 

Price matters and shares of SPW are getting close to a test long-term resistance, as defined in the real time trading report published by Stock Traders Daily.  As a rule, if the stock test long-term resistance, and remains below long-term resistance, we expect lower levels and a test of support. That would make SPW a sell/short at resistance, based on the real-time trading report published by Stock Traders Daily, with risk controls in place if resistance breaks higher.

Sodastream International Ltd (NASDAQ:SODA) is expected to report its Q3 earnings on Wednesday October 30 before the market open.  Analysts’ estimates are for the company to earn $0.73 per share versus $0.80 the company earned in the same quarter a year ago.  In the coming weeks, Bed Bath & Beyond Inc. (NASDAQ:BBBY) will be reorganizing its SodaStream display, increasing the designated shelf space for SodaStream products by roughly 40% YOY.  The new displays will also include SodaCaps, which were only been in test markets, but now will debut in Bed Bath & Beyond stores.  SodaCaps are a syrup-dispensing capsule produced and distributed by SodaStream.  The stock is up 38% YTD, however it has pulled back over 18% from the 52-week highs made in June.  Is the pullback a buying opportunity for investors? 

Investors need to be aware of price, and based on the Stock Traders Daily real-time trading report for SODA, the stock has been drifting closer to long-term support, but isn’t there yet. If the stock continues to move lower, and tests long-term support, we would be buyers near support. If support holds, we would expect a move higher and an eventual test of resistance. We would only be buyers near support and caution investors not to chase the stock ahead of earnings. 

 Navigating earnings can be tricky, sometimes investor’s earnings expectations are correct, but the stocks actually do the opposite of what they think it should have done after earnings, so our opinion based on price can help make investors make more well-rounded and sound investment decisions.

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