Garmin Ltd. (GRMN) makes GPS devices for motor vehicles, aviation, marine and outdoor activities. The company reports earnings before the opening bell on Wednesday, Feb. 20, as the stock set a multi-year intraday high of $71.89 on Friday, Feb. 15.
Garmin stock has been above a "golden cross" since April 5, 2016, when it was trading around $40 per share. The stock has had a positive weekly chart since the week of Jan. 18. It has now become overbought and has the characteristics of becoming an "inflating parabolic bubble."
Garmin shares closed Friday, Feb. 15., at $71.62, up 13.1% so far in 2019 and up 19.4% since trading as low as $59.98 on Dec. 26. The stock saw a "key reversal" day on Dec. 26, as the close that day of $62.20 was above the Dec. 24 high of $61.56. This marked the beginning of the strong momentum run-up in the shares.
Analysts expect Garmin to post earnings per share (EPS) of 79 cents when it reports results on Wednesday. The company has beaten EPS estimates for 12 quarters in a row. Analysts are looking for increasing demand for devices used in fitness, outdoor, marine and aviation applications. In the outdoor segment, there's a new GPS golf device and new wearable devices. The auto segment will likely be a drag, as new vehicles have built-in applications in their dashboards.
The daily chart for Garmin
The daily chart for Garmin shows the stock above a "golden cross" over the past 52 weeks, with the 50-day and 200-day simple moving averages at $66.44 and $64.66, respectively. Note that a secondary high of $68.71 on Dec. 4 was a negative "key reversal" day, as the stock closed that day at $66.40, below the Dec. 3 low of $66.80. From the Dec. 4 high to the Dec. 26 low of $59.98, the stock fell with a correction of 12.7%. Dec. 26 was a positive "key reversal," as the close of $62.20 was above the Dec. 24 high of $61.56.
On Dec. 31, the stock closed at $63.32, which was the input to my proprietary analytics. This resulted in my annual and quarterly pivots at $69.33 and $69.80, respectively, which are the two horizontal lines. My semiannual value level is below the chart at $51.67. The Jan. 31 close of $69.18 generated my monthly risky level at $72.39. For this week, I show a weekly risky level at $74.77.
The weekly chart for Garmin
The weekly chart for Garmin became positive at the close on Jan. 11. The stock is above its five-week modified moving average of $68.78 and well above its 200-week simple moving average, or "reversion to the mean," at $51.65. The "reversion to the mean" was last crossed as a buying opportunity during the week of July 15, 2016. The 12 x 3 x 3 weekly slow stochastic reading ended last week rising to 86.85 from 81.39 on Feb. 8, when the reading rose above the overbought threshold of 80.00. This week's reading could rise above 90.00, which would make the stock an "inflating parabolic bubble."
Trading Strategy: Buy Garmin shares on weakness to the 200-day simple moving average at $64.66, and reduce holdings on weakness to my monthly and weekly risky levels at $72.39 and $74.77, respectively. My annual and quarterly pivots remain at $69.33 and $69.80, respectively. My semiannual value level is $51.67. Keep in mind that this stock set its all-time intraday high of $125.68 in October 2007.
Disclosure: The author has no positions in any stocks mentioned and no plans to initiate any positions within the next 72 hours.