Dow earnings preview: Intel, GE, Verizon
American Express, IBM and United Health are also reporting mid-week.
The market pushed against my monthly risky levels on Thursday in reaction to dovish comments from Fed Chief Ben Bernanke. These levels are now considered pivots, at 15,437 for the Dow ($INDU) industrials, 1669 for the S&P 500 ($INX) and 1030.75 for the Russell 2000. Wednesday's close was above my monthly pivot at 3510 for the Nasdaq ($COMPX). The risky level is 6758 for the Dow Transports.
The technical signal confirming a cycle high for the major averages would be simultaneous weekly closes below the five-week modified moving averages and that hasn't happened yet this year. The five-week MMAs are currently well below market levels at 15,007 for the Dow industrials, 1617.5 for the S&P 500, 3413 for the Nasdaq, 6252 for the Dow transports and 978.57 for the Russell 2000. Closes below these levels today appear highly unlikely.
My quarterly value levels are 14,288 Dow industrials, 1525.6 S&P 500, 3284 Nasdaq, 5348 Dow transports and 863.05 on the Russell 2000 with July's pivots and risky level at 15,437 Dow Industrials, 1669.0 S&P 500, 3510 Nasdaq, 6758 Dow transports and 1030.75 Russell 2000. Three of the major averages are still below their May 20/May 22 highs at 15,542.40 Dow Industrials, 1687.18 S&P 500 and 6568.41 Dow transports. The Nasdaq set a new multi-year high at 3579.29 on July 11 with the Russell 2000 setting a new all time high at 1033.34.
Weekly closes above all of the monthly levels indicate potential strength to my semiannual risky levels at 16,490 Dow industrials, 1743.5 S&P 500, 3759 Nasdaq, 7104 Dow transports and 1089.42 Russell 2000. Weekly closes below the quarterly value levels indicate risk to my annual value levels at 12,696 Dow industrials, 1348.3 S&P 500, 2806 Nasdaq and 809.54 Russell 2000.
Fundamentally, stocks remain under a ValuEngine valuation warning with 75% of all stocks overvalued and with 40.6% of all stocks overvalued by 20% or more.
Next week 10 Dow components are on the earnings calendar. Yesterday I profiled Johnson & Johnson (JNJ) and Coca Cola (KO) in my post on TheStreet, Earnings Scorecard: Yum, Yahoo! On Deck. In another post today I cover bank earnings and include a profile of Dow component Bank Of America (BAC). This post profiles the other seven Dow components that report next week.
OV/UN Valued: Stocks with a red number are undervalued by this percentage. Those with a black number are overvalued by that percentage according to ValuEngine.
VE Rating: A "1-engine" rating is a strong sell, a "2-engine" rating is a sell, a "3-engine" rating is a hold, a "4-engine" rating is a buy and a "5-engine" rating is a strong buy.
Last 12-Month Return (%): Stocks with a red number declined by that percentage over the last 12 months. Stocks with a black number increased by that percentage.
Forecast 1-Year Return: Stocks with a red number are projected to decline by that percentage over the next 12 months. Stocks with a black number in the table are projected to move higher by that percentage over the next 12 months.
Value Level: Price at which to enter a GTC limit order to buy on weakness. The letters mean; W-weekly, M-monthly, Q-quarterly, S-semiannual and A-annual.
Pivot: A level between a value level and risky level that should be a magnet during the time frame noted.
Risky Level: Price at which to enter a GTC limit order to sell on strength.
Dow stocks reporting quarterly results after the close on Wednesday:
American Express (AXP) ($76.94) set its multi-year high at $78.61 on June 10 then held its 50-day SMA at $71.91 on June 24. My quarterly value level is $68.16 with a monthly pivot at $76.35 and semiannual risky level at $78.27.
IBM (IBM) ($192.80) recently faced a Wall Street downgrade and the stock fell to $188.41 into June 28. Following this price weakness the stock was upgraded to buy from hold by www.ValuEngine.com. My annual value level is $171.70 with a weekly pivot at $197.12 and monthly risky level at $203.60.
Intel (INTC) ($23.99) traded as low as $22.64 on July 10 following a Wall Street downgrade. While this occurred the stock was upgraded to buy from hold by ValuEngine. My monthly value level is $22.95 with a weekly pivot at $24.01 and quarterly risky level at $25.38.
Dow stocks reporting quarterly results pre-market on Thursday:
UnitedHealth Group (UNH) ($68.36) set a multi-year high at $68.75 on July 10. My semiannual value level is $62.39 with a weekly pivot at $65.01 and semiannual risky level at $73.01.
Verizon (VZ) ($51.21) traded down from $54.31 on April 30 to a low of $47.77 on June 3. My semiannual value level is $42.34 with a semiannual pivot at $49.86 with a quarterly risky level at $51.27.
Reporting pre-market on Friday is General Electric (GE) ($23.94) was upgraded to buy from hold according to ValuEngine at the beginning of the month. The stock set a multi-year high at $24.45 on June 18. My quarterly value level is $22.75 with a monthly pivot at $23.99 and semiannual risky level at $26.68.
At the time of publication the author held no positions in any of the stocks mentioned.
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