Intuit Inc. (INTU) provides management software solutions for small and medium-sized business, consumers and accountants. The stock closed Wednesday, Feb. 22, at $173.32, up 9.8% year to date after setting an all-time intraday high of $176.25. The stock fell into correction territory when it traded as low as $150.43 on Feb. 9. The stock is up 15.2% since setting this low, so an earnings beat may be priced into this stock.
Analysts expect Intuit to deliver earnings per share of just 9 cents when the company reports results after the closing bell on Thursday, Feb. 23. According to Zacks Equity Research, the company should benefit from recent acquisitions, but investors should beware of rising expenses. With the U.S. tax codes changing this year, there could expenses related to Intuit's flagship product QuickBooks, which provides online management software, and TurboTax, which provides tax preparation software. (See also: Intuit Stock Hits Fresh Highs, but Rally Is at Risk.)
The daily chart for Intuit
Courtesy of MetaStock Xenith
Intuit has been above a "golden cross" since April 1, 2016, when the stock closed at $104.69. This crossover is not shown on the daily chart because it occurred more than 52 weeks ago. A "golden cross" occurs when the 50-day simple moving average moves above the 200-day simple moving average, indicating that higher prices lie ahead. This tracked the stock to its all-time intraday high of $176.25 set on Feb. 21. The horizontal lines show that the stock is well above a wall of value levels. My monthly, annual, quarterly and semiannual value levels are $160.57, $159.61, $158.33 and $155.81, respectively. This week's pivot is $172.26.
The weekly chart for Intuit
The weekly chart for Intuit is neutral, despite the stock having set a new high on Wednesday. The stock is above its five-week modified moving average of $165.52 and well above its 200-week simple moving average at $110.02, which is the "reversion to the mean," last tested during the week of Feb. 12, 2010, when the average was $28.69. The 12 x 3 x 3 weekly slow stochastic reading is projected to decline to 75.08 this week, down from 76.66 on Feb. 16. This is a warning that gains may not be sustained after earnings.
Given these charts and analysis, investors should buy Intuit shares on weakness to my monthly value level of $160.57. Since there are no risky levels, traders could consider using a "sell stop" when the stock closes below its five-week modified moving average of $165.52 and rising each week. (For more, see: Intuit QuickBooks Now Lets You Send Money via Blockchain.)