Grocery store giant The Kroger Co. (KR) reports earnings before the opening bell on Thursday, March 8, with the stock above a "golden cross" since Jan. 11, when it closed at $28.08. The stock is trading between my monthly value level of $26.69 and my weekly risky level of $29.69. Kroger shares closed Tuesday, March 6, at $28.01, up 2% year to date and in correction territory at 10.9% below the Jan. 30 high of $31.45. Kroger traded as low as $26.63 on Feb. 9 and is 5.2% above this correction low.
Analysts expect Kroger to post earnings per share of 63 cents when it reports results on Thursday. The stock had a positive reaction to its previous earnings report on Nov. 30, which resulted in a price gap above its 200-day simple moving average. Zacks Equity Research indicates that, if the food retailer exceeds estimates this quarter, Kroger could bring its winning streak to six consecutive revenue beats and two successive quarters of positive earnings surprises. The key will be guidance on Kroger's strategy to shift its focus to online shopping. (See also: What Alibaba-Kroger Alliance Might Mean for Amazon.)
The daily chart for Kroger
Kroger has been above a "golden cross" since Jan. 11, when the stock closed at $28.08. A "golden cross" occurs when the 50-day simple moving average rises above the 200-day simple moving average, indicating that higher prices lie ahead. The stock subsequently traded higher to its Jan. 30 high of $31.45 and then declined to its 2018 low of $26.63, which is just below my value level for March at $26.69. The stock is below its 50-day simple moving average of $28.39, with my weekly risky level at $29.69.
The weekly chart for Kroger
The weekly chart for Kroger will be negative if the stock closes this week below its five-week modified moving average of $27.89. The stock is below its 200-week simple moving average of $31.62, which is the "reversion to the mean." The 12 x 3 x 3 weekly slow stochastic reading is projected to end this week at 49.80, down from 60.69 on March 2.
Given these charts and analysis, investors should buy Kroger shares on weakness to my monthly value level of $26.69 and reduce holdings on strength to my weekly risky level of $29.69. (For additional reading, check out: Kroger Can Best Weather Grocery Price War: Moody's.)