Home improvement giant Lowe's Companies, Inc. (LOW) reports earnings before the opening bell on Wednesday, Feb. 28, as homeowners continue to make repairs from hurricane storm damages. The stock closed Monday, Feb. 26, at $97.51. up 4.9% year to date and up 5.4% from its Feb. 9 low of $92.51. The stock set its all-time intraday high of $108.98 on Jan. 25 and remains in correction territory since then, down 10.5%.
Analysts expect Lowe's to post earnings per share of 88 cents when it reports results on Wednesday. Investors should keep in mind that arch-rival The Home Depot, Inc. (HD) reported positive earnings but traded lower, as the good news was already priced into the stock. I believe that there are still home repairs being made in the wake of hurricanes Harvey and Irma, but there has been a slowdown in the overall housing market. A key metric in the upcoming earnings release will be consumer traffic. (See also: Why Lowe's Stock Is Closing the Gap on Home Depot.)
The daily chart for Lowe’s
Lowe's has been above a "golden cross" since Nov. 9, when the stock closed at $78.08. 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 bullish crossover remains in play despite the stock correction.
Between Feb. 9 and Feb. 26, the stock has been slowly climbing alongside its 50-day simple moving average, now at $96.97. The horizontal lines show that the stock is between my annual pivot of $96.03 and my semiannual pivot of $100.12. Below is my quarterly value level of $84.81, and above is this week's risky level of $106.60.
The weekly chart for Lowe's
The weekly chart for Lowe's is neutral, with the stock just above its five-week modified moving average of $97.17 and well above its 200-week simple moving average at $72.46, which is the "reversion to the mean," last tested during the week of Nov. 18, 2011, when the average was $22.29. The 12 x 3 x 3 weekly slow stochastic reading is projected to slip to 56.99 this week, down from 72.75 on Feb. 23.
Given these charts and analysis, traders should buy Lowe's shares on weakness to my annual pivot of $96.03 and reduce holdings on strength to my semiannual risky level at $100.12. (For more, check out: Lowe's Stock: Analyzing 5 Key Suppliers.)