Pizza Stocks: Worth Topping Up On?
Dragonfly Capital | Jun 10, 2014 12:59AM ET
My apologies to Little Caesars, but it makes for the perfect title. Pizza stocks are starting to turn back up again after a long pullback. Here are two that it may be worth taking a slice of.
Domino’s Pizza (NYSE:DPZ) had a long trend higher from June 2012. That was interrupted by a quick pullback in January that resulted in a fast move higher through to March. It has been pulling back ever since but appears to have bottomed. I have focused on the latter part of this move in the chart above. Notice the rounded bottom forming as it moves off of the lower Median Line of the Andrews’ Pitchfork. It had a minor break out higher Friday and was back retesting that level Monday. The RSI is trending higher and on the verge of a move into the bullish range with a MACD also rising. I might use a move over the 100 day SMA as a trigger to get long against a stop at the bottom of the consolidation range.
Papa John’s (NASDAQ:PZZA) also ran higher in a strong trend. It accelerated away from that trend in October 2013 and rocketed higher until mid- March. From then it has had a hard pullback but really just to that longer term trend line. The bounce off of it in May has reached the 200 day SMA and it is consolidating again. I see two possible entries on this one. First, on a break of the consolidation higher over 44 against a stop near the 20 day SMA. The second is if it fails here at the 200 day SMA and pulls back to the trend line. It can be a buy there if it holds and shows signs of a reversal. My eyes see the latter as the most likely.
Disclaimer: The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.
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