Procter & Gamble (PG) shares are up about 4% at last check after the consumer-products giant's earnings report.
Earnings per share climbed 3% year over year and topped analysts’ expectations. Revenue also topped consensus expectations, growing 3.7%.
Management reiterated its full-year outlook for core earnings growth, while giving a slight boost to its organic-sales-growth estimates.
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From a technical perspective, two observations arise from today’s post-earnings rally.
First, it reemphasizes our recent observation that funds are flowing into defensive stocks. Names like PepsiCo (PEP) and Coca-Cola (KO) have been trading quite well. Walmart (WMT) has also been performing nicely for the bulls. P&G has been on that list, too.
Second, today’s rally looks as if it will be enough to trigger a larger breakout.
Trading Procter & Gamble Stock
Chart courtesy of TrendSpider.com
On both the daily chart (left) and weekly chart (right), you can see how Procter & Gamble stock is breaking out over the $154 to $155 area. That zone was key resistance in December and January.
P&G shares gapping above this level, holding an intraday pullback to this zone and pushing higher is a very impressive -- and bullish -- performance.
Now that the stock is wavering around the 78.6% retracement, the bulls are looking for more.
Specifically, if P&G can stay above the $154 to $155 zone and clear the 78.6% retracement at $156.11, not much from a technical perspective stands in the way of a run back up to the $165 area.
If the stock climbs that high, it will be pushing all-time highs.
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On the downside, a break back below the $154 to $155 breakout level could usher in a test of the 10-day moving average and the gap-fill level at $151.37.
If that’s the case, we can see how Procter & Gamble stock reacts, but it will have lost most, if not all, of its short-term bullish momentum.
From here for the bulls, it’s really as simple as seeing that the shares hold up over the $154 to $155 zone and clear $156 on the upside.
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