Up Next: The Turtle Stocks of Earnings Season

• Posted by Greg Harmon
• on October 27th, 2011

Earnings season takes a bit of a breather Friday morning with only about 40 companies reporting. What better time then to look at three that will be reporting that are steady stocks with high dividends and low volatility. Tomorrow might be your opportunity to add them to your or your client’s account at a great price.

Chevron Corp, $CVX

Chevron Corp, $CVX, has had a great run for a slow and steady stock moving off of the double bottom and finishing a ‘W’ pattern today at resistance. With a 3% dividend yield and an historical volatility of 34% (the S&P 500 SPDR is 28%) it is not expected to move much after earnings. As it arrives it has a Relative Strength Index (RSI) that is rising and strong near 70 and a Moving Average Convergence Divergence (MACD) that is increasing, both supporting further upside. If it can get over 110 then it has a lot of upside potential. If the reaction to earnings knocks it lower then look at today’s gap as first support.

Dominion Resources, $D

Dominion Resources, $D, also has a low volatility at 21% and a large dividend yield at 3.9%. What is better is that it has been in a long and steady uptrending channel since March. All of the Simple Moving Averages (SMA) are steadily rising and have the same slope, the RSI has been bullish for the entire run higher with a brief exception from the August 9th dip and the MACD is growing again. This is also set up to move higher. But the gap up and Evening tar Doji, signal a potential reversal at the top of the channel. The earnings catalyst will likely resolve the Doji either up or down. A move higher through the channel top would come with a measured move to 57.5 and a negative reaction could lead to a retest of the 50 day SMA below.

Merck & Co, $MRK

Merck & Co, $MRK, has been the slogging tortoise plodding sideways with low volatility and a dividend yield of 4.6%. Not a bad place to be for moving sideways. As it comes into earnings tomorrow it has a RSI that is rising and an MACD that is increasing. It also printed an Evening Star candle, a potential reversal sign as it hit the area of two previous gaps between 34.25 and 34.50. If the reaction to earnings bridges that gap area higher there is resistance above at the 37.55 area. If the reaction confirms the reversal lower then look for support at 33.

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