The Kroger Co. (KR) is a major supermarket chain preparing to report earnings before the opening bell on Thursday, June 20. The stock closed Monday, June 17, at $24.36, down 11.4% year to date and in correction territory at 18.7% below its 2019 high of $29.97 set on Feb. 28. The stock is 8.6% above its May 31 low of $22.44.

Analysts expect Kroger to post earnings per share of 72 cents to 73 cents when the grocer reports results before on Thursday. The stock is reasonably priced with a P/E ratio of 11.55 and a dividend yield of 2.31%, according to Macrotrends. The supermarket chain is aggressively transforming its business model toward multi-channel services, but sales growth has lagged Walmart Inc. (WMT) and Target Corporation (TGT). The key to earnings will be guidance relative to online sales and in-store foot traffic.

The daily chart for Kroger

Daily chart showing the share price performance of The Kroger Co. (KR)
Refinitiv XENITH

Kroger stock has been below a "death cross" since Feb. 20, when the 50-day simple moving average fell below the 200-day simple moving average, indicating that lower prices lie ahead. The stock closed Feb. 20 at $28.75 and subsequently traded to as low as $22.44 on May 31. The 50-day and 200-day simple moving averages are now at $24.71 and $27.45, respectively. The pivot for June is $24.35, with a weekly value level at $23.06 and a quarterly value level at $21.41.

The weekly chart for Kroger 

Weekly chart showing the share price performance of The Kroger Co. (KR)
Refinitiv XENITH

The weekly chart for Kroger will shift to positive if the stock ends this week above its five-week modified moving average of $24.37. The 200-week simple moving average, or its "reversion to the mean," at $30.09 has been a barrier on strength since the week of March 3, 2017. The last test was at $31.69 during the week of Nov. 16, 2018.

The 12 x 3 x 3 weekly slow stochastic reading is projected to rise to 31.17 this week, up from 23.74 on June 14. A weekly close above $24.36 would shift the weekly chart to positive and target the 200-week simple moving average at $30.09.

Trading strategy: Buy Kroger shares on weakness to this week's value level at $23.06 and reduce holdings on strength to the 200-day simple moving average at $27.45. Its monthly pivot at $24.35 should be a magnet until June 28.

How to use my value levels and risky levels: Value levels and risky levels are based upon the last nine weekly, monthly, quarterly, semiannual, and annual closes. The first set of levels was based upon the closes on Dec. 31. The original semiannual and annual levels remain in play. The weekly level changes each week; the monthly level was changed at the end of each month. The quarterly level was changed at the end of March.

My theory is that nine years of volatility between closes are enough to assume that all possible bullish or bearish events for the stock are factored in. To capture share price volatility, investors should buy shares on weakness to a value level and reduce holdings on strength to a risky level. A pivot is a value level or risky level that was violated within its time horizon. Pivots act as magnets that have a high probability of being tested again before their time horizon expires.

The close on June 28 is the second most important for 2019. This close will be an input to my proprietary analytics and will generate new weekly, monthly, quarterly, and semiannual levels.

Disclosure: The author has no positions in any stocks mentioned and no plans to initiate any positions within the next 72 hours.