Deere & Company (DE) is set to report earnings above a "golden cross" on its daily chart and with a positive but overbought weekly chart. Shares of the heavy equipment manufacturer closed Wednesday, Feb. 13, at $162.70, up 9.1% so far in 2019 and in bull market territory at 26.8% above the Oct. 29 low of $128.32.
The stock did set a low of $136.13 on Dec. 26 along with the market. It seems that most tickers that set lows on Dec. 26 ended that day above their Dec. 24 high for a classic "key reversal," and this was the case for Deere. The Dec. 26 close was $143.27, above the Dec. 24 high of $142.34. This buy signal tracked the stock to its 2019 high of $166.19 set on Jan. 16.
Deere is due to report earnings before the opening bell on Friday, Feb. 15, and analysts expect the maker of equipment for farming, snow removal, lawn maintenance and construction to post earnings per share of $1.80. Deere is a company that should benefit from an improving economy and potential infrastructure spending. This notion is not shared by Bank of America Merrill Lynch, which downgraded the stock to neutral from buy with a $170 price target. Deere has a P/E ratio of 17.69 and a dividend yield of 1.84% according to Macrotrends.
The daily chart for Deere
The daily chart for Deere shows that the stock began 2019 with a "golden cross" formation confirmed on Jan. 10, when the 50-day simple moving average rose above the 200-day simple moving average to indicate that higher prices would follow.
The stock closed Dec. 31 at $149.17, which provided the input to my proprietary analytics. My semiannual and annual value levels are $150.56 and $134.22, respectively. My quarterly risky level is above the chart at $176.59. The close of $164.00 on Jan. 31 resulted in my value level for February at $149.63.
The weekly chart for Deere
The weekly chart for Deere is positive but overbought, with the stock above its five-week modified moving average at $158.18. The stock is also well above its 200-week simple moving average, or "reversion to the mean," at $114.16. The 12 x 3 x 3 weekly slow stochastic reading is projected to rise to 84.03 this week, up from 81.99 and rising further above the overbought threshold of 80.00.
Trading Strategy: Buy Deere shares on weakness to my semiannual and monthly value levels at $150.56 and $149.63, respectively, and reduce holdings on strength to my quarterly risky level at $176.59.
Disclosure: The author has no positions in any stocks mentioned and no plans to initiate any positions within the next 72 hours.