News this morning was an earnings problem with McDonald's and a couple of downgrades in the restaurant sector. Let's take a look at the sector.
This is the Dow Jones US restaurant index and its got a lot of names and of course McDonald's is the heavyweight in the group. Before the earnings, as of the close yesterday, you could see that the group heading up towards resistance from the old high in April, above its averages although the averages are trending higher they are not great in my opinion. Indicators are a little on the high side, overbought, but the on-balance line for the group is not terrible. At least its going up for this little phase, of course not as high as it was earlier in the year. So this is a good place for profit-taking before any kind of news
Take a look at McDonald's. This line here is the pre-market trading so you can see it's down quite a bit - a couple of bucks - but overall it's not terrible. Still above the 200-day average. RSI is going to dip but away from the overbought region. The on-balance line looks pretty good down here so so far not really a terrible outcome for McDonald's and possibly even just a buying opportunity or at least something to look at.
Let’s move on to the next one that was in the news Panera Bread. Again here is the the pre-market trading so it’s down a little bit not terrible but again the overall charge is not terrible. Looks pretty good but momentum is slacking off a bit as you can guess because of this trading range. On-balance line not terrible but not great either so right now the thing is trading around its 50-day average in the pre-market. Until this support level break here I would say that there's really not a big problem. I don't want to buy it right here because it's trendline is broken to the downside. But I will keep it on the radar screen because maybe at the support level if it shows some sort of bounce that might be a good place.
Just a couple more to look at El Pollo Loco. This stock is obviously in bad shape even though it's above its averages right now the trend is kind of flat after a bear market. Not a whole lot to say about it down a little bit in the pre-market but really wouldn't want to be looking at this one at all today.
Cheesecake Factory you can see this as an actual trend line breakout to the upside and is pulling back. You can see that’s the pre-market level so this might be just a pullback from overbought condition and again a possible buying opportunity if it shows some bouncing with a little bit of power as it comes back down.
Finally DRI at support. The shorter line in there is the pre-market trading with not a whole lot of movement. To me it looks like it's at the bottom of a trading range or a support level and the only problem is on-balance volume is falling. Because it didn't bounce strong after hitting the support previously I kind of think it's trying to break down or move to the downside. So watch out for the breakdown. I don’t know if I like this on the long side. https://www.youtube.com/watch?v=NtIZO02SFjI
Submitted July 26, 2016 at 11:09AM by TechnicianApp http://ift.tt/2acioSI
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