Joy's Price Action after Earnings, Not a Good Sign for the Bulls
By David Becker, TradersHuddle.com
Joy Global (NYSE: JOY) reported earnings of $142.4 million, or $1.33 per share, up from $102.2 million, or 96 cents per share, a year earlier. The results met analysts' expectations. Revenue climbed 31 percent to $1.14 billion from $869.5 million, missing analysts estimate of $1.16 billion. The guidance by the company was upbeat. Joy Global boosted both its fiscal 2012 earnings and revenue outlooks.
Price action in the stock has been consolidative, and today's downward price pressure, did not help bulls. The pressure on the markets created a small double top where shorts can feel comfortable holding stops. The price has tested the upside numerous times during 2012, but the market has rebuffed any upside attempts near resistance at $95.
The stock has been able to hold support levels near the 50 and 200 day moving average, which are printing on top of one another near $84.50. This level also coincides with an upward sloping trend line support created from the low made in mid January, and the low made in mid February. During the past 4 months, the stock has traded in a $20 dollar range between $95 and $75, which has allow the medium term and long term moving averages to converge.
The MACD moving average convergence divergence index created a buy signal (the spread - the 12-day moving average minus the 26-day moving average crosses above the 9-day moving average of the spread). In mid February, but the stock price has failed to follow through given the expected momentum created by the signal.
High volume seems to coincide with the tops and the bottoms of the current range, which should be a signal for those who look to trade the range with guidance of a peak or trough. As the stock moved lower, volume strongly made a push above its 50-day moving average.
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