The Kroger Co. (NYSE:KR) fell as the company warned on profit growth

The Kroger Co. (NYSE:KR) fell as the company warned on profit growth

The Kroger Co. (NYSE:KR) fell as the company warned on profit growth

Shares of Kroger, Inc. (NYSE:KR) were dropping today after the supermarket operator issued an underwhelming second-quarter earnings report. Comparable sales were short of analyst estimates, and the company warned on future profit growth as it continues to make investments. As a result, Kroger shares closed down 9.9%.

The nation’s largest traditional supermarket operator said comparable sales improved 1.6% in the quarter, a solid clip, but short of analyst expectations at 1.8%. Total revenue increased 1%, or 1.8% excluding the impact of fuel, divestitures, and acquisitions to $27.9 billion, which was slightly short of the consensus at $28 billion.

Gross margin fell 36 basis points to 21.3%, reflecting lower prices, higher transportation costs, and the growth of the low-margin specialty pharmacy business. Operating, general, and administrative expenses rose 36 basis points as a percentage of revenue due to higher spending on incentive plans. Adjusted earnings per share (EPS) rose from $0.39 to $0.41 as the company benefited from a lower tax rate and a sharply reduced share count. That result was ahead of estimates at $0.38. Digital sales again grew briskly, increasing more than 50%.

Overall, the bias in prices is: Downwards.

The projected upper bound is: 30.49.

The projected lower bound is: 26.66.

The projected closing price is: 28.58.

Candlesticks

A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 7 white candles and 3 black candles for a net of 4 white candles. During the past 50 bars, there have been 25 white candles and 25 black candles.

A falling window occurred (where the bottom of the previous shadow is above the top of the current shadow). This usually implies a continuation of a bearish trend.

A long upper shadow occurred. This is typically a bearish signal (particularly when it occurs near a high price level, at resistance level, or when the security is overbought).

A spinning top occurred (a spinning top is a candle with a small real body). Spinning tops identify a session in which there is little price action (as defined by the difference between the open and the close). During a rally or near new highs, a spinning top can be a sign that prices are losing momentum and the bulls may be in trouble.

Momentum Indicators

Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.

Stochastic Oscillator

One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 12.6096. This is an oversold reading. However, a signal is not generated until the Oscillator crosses above 20 The last signal was a sell 3 period(s) ago.

Relative Strength Index (RSI)

The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 34.96. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a sell 13 period(s) ago.

Commodity Channel Index (CCI)

The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is -312.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. The last signal was a sell 3 period(s) ago.

MACD

The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a sell 2 period(s) ago.

Rex Takasugi – TD Profile

KROGER CO closed down -3.150 at 28.580. Volume was 82% above average (neutral) and Bollinger Bands were 9% wider than normal.

Open High Low Close Volume___
28.500 29.180 28.300 28.580 4,614,855

Technical Outlook
Short Term: Oversold
Intermediate Term: Bullish
Long Term: Bullish

Moving Averages: 10-period 50-period 200-period
Close: 31.48 29.95 27.16
Volatility: 66 40 42
Volume: 2,319,484 1,848,385 2,652,537

Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.

Summary

KROGER CO gapped down today (bearish) on normal volume. Possibility of a Runaway Gap which usually signifies a continuation of the trend. Four types of price gaps exist – Common, Breakaway, Runaway, and Exhaustion. Gaps acts as support/resistance.
KROGER CO is currently 5.2% above its 200-period moving average and is in an upward trend. Volatility is extremely high when compared to the average volatility over the last 10 periods. There is a good possibility that volatility will decrease and prices will stabilize in the near term. Our volume indicators reflect volume flowing into and out of KR.N at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bullish on KR.N and have had this outlook for the last 28 periods.

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