Tuesday’s market activity is going to get a nudge from some earnings reports as the likes of Coach Inc (NYSE:COH), Merck & Co., Inc. (NYSE:MRK) and Cummins Inc. (NYSE:CMI) are drawing responses from technical buyers as they review the charts.
In short, Cummins and Coach are set to benefit from their earnings as the stocks are getting help from their charts while Merck shares are tiptoeing across a sensitive technical support level that is indicating a higher probability of a breakdown in the shares is on the horizon.
Coach Inc (COH)
Shares of the upscale retailer are just another in the lengthening strong arm of consumer discretionary earnings results. This is one of the sectors that have seen stronger than average results through the earnings season.
Coach stock’s chart turned bullish last month when the 50-day moving average transitioned into a bullish pattern, followed by a Golden Cross. Now, the 100-day is preparing to cross over the 200-day, signaling a strengthening long-term trend for COH stock.
Just ahead of the earnings announcement, we watched Coach shares decline as the traders were “selling the rumor” ahead of the number. This means that these and other traders will be “buying the news” to get back into COH stock.
The open will see Coach breach the upper Bollinger Band also, signaling that a volatility rally is ready to ensue. For now, the short-term target for this move would be $44.
Merck & Co., Inc. (MRK)
Merck spent the morning releasing their better-than-expected quarterly results. So far, the results aren’t reflecting as much strength as we would have expected with the stock trading slightly lower in the pre-market activity.
MRK stock is sitting in a precarious position as it is teetering on critical support. Failure for the earnings news to get Merck moving from this support will put additional pressure from sellers.
Currently, MRK stock is positioned on its 200-day, which is at $62.25. The stock is also sitting just under the 100-day moving average at $62.85. Finally, the stock’s 50-day just transitioned into bearish mode as it rolled over and is now declining. The technical pressure appears to be mounting against the pharma giant.
Cummins Inc. (CMI)
Cummins shares are trading 7% higher ahead of the open after the company provided great earnings results and provided a positive view on its international demand and growth. CMI stock continues to trend more strongly that the benchmark indices with the stock trading 11% higher before this morning’s open.
Cummins’ 50-day moving average just came into play to help support the stock. The trendline will also continue its ascent with today’s move, maintaining a bullish outlook for CMI stock.
Outside of the technicals, analyst recommendations on Cummins are extremely low with only 13% of those covering the stock rating it a buy.
The expected upgrades and bounce from the 50-day provide a technically bullish outlook for CMI shares with a target of $175.
As of this writing, Johnson Research Group did not hold a position in any of the aforementioned securities.