Media giant CBS Corporation (CBS) reports quarterly earnings after the closing bell on Thursday, Feb. 14, with the stock holding my quarterly and weekly value levels at $48.08 and $47.31, respectively. The weekly chart shows a potential downgrade to negative given disappointing earnings.
CBS stock closed Tuesday, Feb. 12, at $48.38, up 10.7% so far in 2019 and 16.9% above its Dec. 26 low of $41.48. Even so, the stock is also in correction territory at 18.8% below its all-time intraday high of $59.56 set on Nov. 2. Analysts expect CBS to post earnings per share of $1.53 when the media giant reports results after the closing bell on Feb. 14. The stock is reasonably priced with a P/E ratio of 9.90 and a dividend yield of 1.50% according to Macrotrends.
According to NBC News, there's a shareholder lawsuit that accuses former CEO Les Moonves and other executives of stock sales before the news of the CEO's sexual misconduct was released publicly. This is a tough backdrop within which to be bullish on CBS stock. If there is a positive reaction to earnings, the upside should be limited.
The daily chart for CBS
The daily chart shows that CBS stock peaked with a "key reversal" day on Nov. 2, when it set its 52-week high of $59.56. This "key reversal" occurred after the stock set its cycle high and then closed at $56.17, below its Nov. 1 low of $57.41. This negative warning was in play when the stock traded as low as $41.38 on Dec. 26.
The close on Dec. 31 at $43.72 resulted in my quarterly pivot at $48.08, as shown by the middle horizontal line. The Jan. 31 close of $49.46 resulted in the horizontal line at $54.86, which is my risky level for February. My weekly value level is $47.31.
The weekly chart for CBS
The weekly chart for CBS is neutral, with the stock below its five-week modified moving average of $49.07 and below the 200-week simple moving average, or "reversion to the mean," at $55.46. The 12 x 3 x 3 weekly slow stochastic reading is projected to rise to 43.48, up from 40.35 on Feb. 8.
Trading Strategy: Buy CBS shares on weakness to quarterly and weekly value level at $48.08 and $47.31, respectively, and reduce holdings on strength to my monthly risky level at $54.86. My semiannual value level is below the chart at $32.91. My annual risky level is above the chart at $79.05.
Disclosure: The author has no positions in any stocks mentioned and no plans to initiate any positions within the next 72 hours.