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Analyst Blog

The stock market is getting into the heart of Q3 earnings season.  The calendar is packed between October 14 and 18.  Given the flow of fundamental news, it might be worth taking a look at the technical set up of a few names reporting earnings.  Here are five charts which show promise for future gains.

Johnson and Johnson (JNJ - Analyst Report), Zacks Rank #3 (Hold), releases its earnings report on October 15.  The stock has traded lower in recent weeks and formed a bullish wedge formation.  Prices have been able to hold just above the $85 area.  A move over the recent high just below $91 will confirm a bullish break out and put prices in position to test the recent high near $95.50.  A breach of $85.50 would question the validity of the set up.   The $87.30 area should be a region of support above $85.50.   According to the MACD, price momentum seems to be turning upward. JNJ has beaten the Zacks Consensus Earnings per Share Estimate 10 straight quarters.

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Packaging Corporation of America (PKG - Snapshot Report), Zacks Rank #3 (hold), reports earnings on October 15.  It has corrected back into support in the $55 area in recent sessions and shows signs of turning higher.  It looks set to rebound into the low $60 area and continue the uptrend.  Movement below the $54 region would question the market’s strength.  The MACD is showing bottoming price momentum and is supportive of a turn higher and resumption of the uptrend.  PKG has beaten the Zacks Consensus Earnings per Share estimate 7 of the past 10 quarters.

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PNC (PNC - Analyst Report), Zacks Rank #3 (Hold), releases its profits on October 16.  This chart shows a downward sloping wedge pattern off the July high. A rally over the top of the wedge pattern in the $74.50 area will confirm a breakout and point to at least $78.  There is room for additional gains over $78 and a continuation of the uptrend. The MACD is showing signs of improved momentum and is confirming a turn higher in price. The pattern resembles a classic consolidation before a new leg higher.  A close below the $70 level would negate the pattern.  PNC has beaten earnings estimates 9 out of the past 10 quarters.

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Verizon (VZ - Analyst Report), Zacks Rank #3 (Hold), is trading in a downward slowing channel.  There is a wall of resistance in the $48.50 to $49.00 area.  A close over the $50 region would argue for a breakout of the downward sloping channel and set up a test of the high just over $53.  A close below the $45.50 area would be a sign of weakness.   There has been a surge in volume off the recent lows and price momentum shows signs of stabilizing.  VZ has a very mixed record on earnings surprises.  The stock reports on October 17.

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Capital One (COF - Analyst Report), Zacks Rank #2 (Buy), is expected to report on October 17.  It has exceeded earnings estimates 7 out the past 10 quarters and has recently shown uneven reporting compared to previous years.  However, it has rallied over the recent highs and looks set for a fresh leg higher.  The $70 area looks like a floor of support, and prices could move into the $76 area.  The MACD shows improved price momentum.   A solid close back below the $69.50 would sour the friendly chart set up.

(click chart to enlarge)

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