Luxury retailer Movado Group, Inc. (MOV) is set to report earnings before the opening bell on Thursday, May 30. The stock has been below a "death cross" since Nov. 12 and has a negative weekly chart. Movado shares closed Tuesday, May 28, at $32.61, up 3.1% year to date and up 13.4% since trading as low as $28.76 on Dec. 24. The stock set its 2019 high of $40.20 on March 28 and is in correction territory at 18.9% below this high.
Analysts expect Movado to post earnings per share of 30 cents when it reports on Thursday morning. The stock is reasonably valued with a P/E ratio of 12.54 and a dividend yield of 2.39%, according to Macrotrends. The bulls say to buy the stock for its dividend, noting that the company will reward investors as it did last year by paying out 30% of its profits in dividends.
The daily chart for Movado
The daily chart for Movado shows the formation of a "death cross" on Nov. 2, when the 50-day simple moving average fell below the 200-day simple moving average to indicate that lower prices lie ahead. Since then, there were opportunities to sell strength to the 200-day simple moving average at $41.82 on Dec. 4 and again at $39.85 on March 28. The spikes higher on Dec. 4 and March 28 were on positive reactions to earnings.
Movado stock's semiannual pivot at $32.14 has been a magnet all year as a level at which to buy. Annual and quarterly risky levels are shown at $44.11 and $45.81, respectively. This month's value level is $29.47.
The weekly chart for Movado
The weekly chart for Movado is negative, with the stock below its five-week modified moving average of $33.98 and above its 200-week simple moving average, or "reversion to the mean," at $30.05. The 12 x 3 x 3 weekly slow stochastic reading is projected to end the week declining to 34.05, down from 40.20 on May 24.
Trading strategy: Buy Movado shares on weakness to the 200-week simple moving average at $30.05 and reduce holdings on strength to the 200-day simple moving average at $36.85.
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 January, February, March and April. 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.
Disclosure: The author has no positions in any stocks mentioned and no plans to initiate any positions within the next 72 hours.