Media giant CBS Corporation (CBS) is expected to highlight favorable demand for its content when it reports quarterly earnings after the closing bell on Thursday, Feb. 15. However, this possibility is not reflected in the daily or weekly chart patterns shown below.
The stock closed Tuesday at $54.67, down 7.3% year to date and in correction territory at 11.2% below its 2018 high of $61.59 set on Jan. 18. CBS stock set its 2018 low of $50.63 on Feb. 9 and has rebounded by 8% since then. The stock set its all-time intraday high of $70.09 on April 5, 2017.
Analysts expect CBS to post earnings per share of $1.15 to $1.19 when the company reports results on Feb. 15. The question is how much CBS shares can rebound on a positive reaction to earnings. The daily and weekly charts below can help answer this question. Success may involve demand for content such as wholly owned Showtime's streaming service, its 29 owned-and-operated stations and other channels. (See also: The Contrarian: Does CBS Make Money or Not?)
The daily chart for CBS Corporation
The daily chart for CBS shows that the stock has been below a "death cross" since Sept. 12, when the 50-day simple moving average moved below the 200-day simple moving average as the stock closed at $58.82. This indicated that lower prices would continue, and they have. The horizontal lines show the semiannual value level of $51.80, which held at the recent low. My monthly pivot of $58.46 failed to hold on Feb. 2.
The weekly chart for CBS Corporation
The weekly chart for CBS is negative, with the stock below its five-week modified moving average of $56.46 and below the 200-week simple moving average at $56.74, which is also the "reversion to the mean." The 12 x 3 x 3 weekly slow stochastic reading is projected to decline to 43.63 this week, down from 53.70 on Feb. 9.
Given these charts and analysis, my strategy is to buy CBS shares on weakness to my semiannual value level of $51.80 and to reduce holdings on strength to my monthly pivot of $58.46. (See also: CBS Stock Could Reward Bottom Fishers.)