05/25/2022
I love those subject lines, but I wanted to put my own spin on it.
To be fair, there’s quite a few stocks that have watched their market cap receive a haircut and everyone’s accounts are feeling it…
When will it end?
(Source: tenor.com)
For the time being, it appears that it’s here to stay.
Despite Before the Bell being a technical analysis-oriented newsletter, I make no hard predictions… That’s not what technical analysis is.
The ideas I send to you are just that — ideas.
They’re ideas based on probabilities and patterns with concepts that I hope you find useful when you are evaluating your own potential trades…
And when I show battered charts like today’s subject, the only thing I’d ask is that you question where the opportunity is because someone, somewhere is profiting from it…
…even when it’s a company that offers bottomless fries.
Here’s Red Robin Gourmet Burgers, Inc. (RRGB):
We’re checking out both the daily and hourly charts today, particularly because the hourly has a couple of anomalies worth noting.
Now, I have zero knowledge of the company’s fundamentals other than the fact that they’ve consecutively missed earnings, so buyer beware…
But it appears someone’s buying.
Starting with the daily, the last eight months (and year) have been a steady downtrend… a fall of over 75%.
The green vertical bars show the bounces off the Reaction Lows, but trading these areas is risky business. Notice that the highlighted areas can last for days.
Still, looking at the chart, RRGB seems a bit oversold with an RSI reading of 23.49 (red arrow)… and the MACD is beginning to curl higher.
Chris Hood’s proprietary Squeeze Trading Tool 1.0 is also well into the bottom of the histogram with a “No Squeeze” signal.
“Maybe an early entry for scaling in?”
Sure… But I’d stay small. At the bottom of the chart, I’ve noted the earnings date which is tomorrow.
If there’s a surprise, I marked potential sell prices with double-arrows based on levels of Resistance and the Volume Profile, the latter being the “easy” targets.
I mentioned the hourly had a number of peculiarities…
Check out the spikes in buy volume, both of which occurred in regular trading hours.
This could be an attempt to drive the price up and lure buyers in, only to go short after earnings. It could also be that there’s an expectation for a turnaround…
Further down on the lower chart, the RSI is showing a “hidden divergence”. This is where we have lower highs on the candlestick chart, but higher highs on the indicator.
I like the idea, but I’d be careful about holding through earnings.
(Disclosure: I hold no position in RRGB.)
This material is not an offering, recommendation, or a solicitation of an offer to buy or sell the securities mentioned or discussed, and is to be used for informational purposes only. Any performance results discussed herein represent past performance, not a guarantee of future performance, and are not indicative of any specific investment. Due to the timing of information presented, investment performance may be adjusted after the publication of this report. There can be no assurance that the future performance of any specific investment, investment strategy, or product made reference to directly or indirectly in this communication will be profitable, equal any corresponding indicated historical performance levels or be suitable for your portfolio.
