Intriguing Earnings on Tap

 | Jul 26, 2012 | 1:00 PM EDT
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When I'm eyeing stocks on a watch list, one of the data points I always track is the earnings date. As Apple (AAPL) owners saw on Wednesday, it can be painful to be caught in a stock when the report disappoints -- though, as we also know, there can be a "kicking yourself" moment when a stock you've been watching beats views and gaps higher.

Nonetheless, it's a good risk-management strategy for traders to avoid holding around earnings, or to at least pare back on position sizes ahead of a report.

There are plenty of notable reports on the docket later this week and early next week, including from Starbucks (SBUX), Amazon (AMZN) and Facebook (FB) after Thursday's close. But it's not only some widely held and closely watched names that could show earnings-driven price moves this week.

For instance, analysts are continually debating whether Coinstar (CSTR) could benefit from Netflix's (NFLX) troubles. That debate got was fed more fuel Wednesday as Netflix plunged 25% after much-worse-than-expected subscriber numbers.

Coinstar, which operates the Redbox video rental kiosks, is due to report its second quarter late Thursday. It's expected to earn $1.17 a share on revenue of $545.03 million. Those would be sizeable year-over-year gains.

I had been tracking this stock closely a few weeks ago, as it was getting support above its 15-day moving average. Beginning in July, however, that support broke down, and the stock closed Wednesday at $59.27 -- 6% below its 50-day moving average.

As of this writing, the stock is not buyable because it's continuing to trend lower. Even if it sees an upside bounce after earnings, Coinstar will have some work to do before it can regain support at shorter-term moving averages that might indicate a buy opportunity.

Meanwhile, behavioral clinic operator Acadia Healthcare (ACHC) is set to report its second quarter after Monday's closing bell. This stock has had a recent initial public offering, having made its Nasdaq debut in November. It's a small company, with market capitalization of just $677 million. On average, 383,000 shares change hands per day.

Acadia stock had been advancing along its 10-week moving average for its entire run. It dipped beneath that key price line a few times, but rebounded fairly quickly.

However, for the second week in a row, the stock is trading beneath the 10-week line. On July 18, Acadia was downgraded to Hold from Buy at Deutsche Bank, which kept its $19 price target. That day, shares skidded 3.9% in heavy volume, closing beneath its 50-day line for the first time since early June.

The stock closed Wednesday at $16.24.

The effects of analyst downgrades are often fairly short-lived. Following the rating cut, the major indices began selling off, and that likely contributed to Acadia's slide. The stock is currently trading below its medium- and short-term moving averages, meaning that it would need quite a boost from a good earnings report to put it in the buy zone.

However, watch the moving averages: The 15- and 5-day exponential lines are heading lower. In addition, the 15-day is above the 5-day. When the shorter-term line crosses above the 15-day, that could offer an early buy signal for more aggressive investors. But there's another caveat, and that's the general market. If the major indices have returned to an uptrend, that would be an additional confirmation that Acadia -- and many other technically sound stocks -- could be buyable.

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volatility is quite low here, and we could see some downsides here in the short term. ...



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