Herman Miller, Inc. (MLHR) makes office furniture concentrating on the education and health care environment in addition to general office needs. The stock set its all-time intraday high of $41.85 on Jan. 24 and then crashed by a bear market 28.4% to its 2018 low of $29.95 set on March 27. At the low, the stock was just below its technical "reversion to the mean," which is its 200-week simple moving average.
Herman Miller stock is relatively cheap, with a P/E ratio of 12.82 and a dividend yield of 2.55%. Shares of the furniture maker closed last week at $31.03, down 22.5% year to date and in bear market territory at 25.9% below the 2018 high of $41.85 set on Jan. 24.
Analysts expect Herman Miller to report earnings per share of 72 cents when the company reports results after the closing bell on Wednesday, Dec. 19. Most on Wall Street expect the company to report a year-over-year increase in earnings on higher revenue. The charts below show that the stock has been quite choppy over the past 52 weeks and over the past five years.
The daily chart for Herman Miller
The daily chart for Herman Miller shows how the formation of a "golden cross" or a "death cross" does not always result in higher or lower prices, respectively. This occurs when you can identify that the stock is in a trading range. This is when value levels, pivots and risky levels are used to trade the short-term volatility. The horizontal line at $34.07 is my semiannual pivot, which was a magnet between Oct. 10 and Dec. 3, when it failed to hold.
The weekly chart for Herman Miller
The weekly chart for Herman Miller is negative but oversold, with the stock below its five-week modified moving average of $32.70 and currently below its 200-week simple moving average of $32.07. which is the "reversion to the mean." Note how the "reversion to the mean" has been a magnet since the week of Jan. 8, 2016. Buying weakness to the 200-week has been successful for short-term trades several times. The question today is whether the current dip below the 200-week will work again as a buying opportunity. The 12 x 3 x 3 weekly slow stochastic reading is projected to decline to 12.80, falling below the oversold threshold of 20.00.
Given these charts and analysis, investors should buy Herman Miller shares on weakness down to the March 27 low of $29.95 and reduce holdings on strength to my semiannual pivot at $34.07. Traders could consider a sell stop on a weekly close below the 200-week simple moving average at $32.07.
Disclosure: The author has no positions in any stocks mentioned and no plans to initiate any positions within the next 72 hours.