Sitting On The Edge Of A Move In Brinker International
Dragonfly Capital | Aug 25, 2016 12:28AM ET
You are correct, that is not a Chili’s Grill & Bar. But the parent company of Chili’s, Brinker International (NYSE:EAT), is on the brink of a break out. This is significant because just over 2 weeks ago it did just that. Following its earnings report the stock shot higher, moving from 45 to 55 in just 3 days. And since then it has digested that move in a bull flag.
The RSI has moved to overbought and the MACD is moving sideways after a steep move up. Normally these would make one pause before buying this stock. And they do still shout caution, but momentum is a crazy thing. This stock had been consolidating sideways for nearly a year before the jump two weeks ago. An old trader's saying goes: the bigger the base, the higher it goes into space.
From the chart you can see a Measured Move out of the flag would target a return to the all-time high from February 2015. Overbought can get more overbought. The Bollinger Bands® are turning higher and still wide. And even after the run up, short interest is still over 12%. A move to 64 could easily happen.
What it takes to get involved in this stock is a break above the flag, over 55. Until then, sit and order hors d’oeuvres. And watch out for a break below 53.50. In that case it may be time for some cliff diving back to the 47 area.
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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