Chart of the Week: Darden
Hey good morning everyone. Happy Wednesday. It’s time for our chart of the week, and this week we’re gonna be focusing on eatery/restaurant Darden Group, which is Olive Garden and some other restaurants too. Chart looks pretty good. Let’s take a look at it here together.
What I find interesting here is the stock has been in a long term uptrend. Follow the big blue arrow – higher highs, higher lows. And that is a textbook definition of an uptrend. It’s been making beautiful higher highs along the way here. And more recently, this past Monday the 3rd, February 3, had a beautiful outside day. What is an outside day? It’s when the stock has a lower low and a higher high from the prior day, and it’s bullish when it closes in the upper end of the range. So that’s what it did on that Monday.
Of course, Monday of course was a horrible day for the markets. Started off horribly and actually improved as the day moved on. Certainly a very impressive move with Darden on that day.
And that follows a big sharp gap up in December following earnings. Earnings came out in mid-December. And you see it had gapped down to the 100 day moving average here, just in front of earnings. And it popped up on a big earnings surprise to the upside. Meandered around a little bit, got a few sellers out there. Came back and tested this 20 day moving average and started riding it back up. And then recently it’s just pushed up through here to new all-time highs.
Volume trends are pretty strong. We like the volume over here, and then also on the up days, the volume has been very strong as well.
MACD is on a buy signal here from a couple of weeks ago. And we do see good strength in the RSI up here. And it is overbought. Now remember, overbought doesn’t mean you need to sell. It just means you need to be on watch, on caution. If this stock does come back a little bit for a pullback, because the stock has gotten overheated here, then it might be a good opportunity to step in and do some buying.
Money flow, though, has improved but it’s not as great as you’d like to see. People are not going hand-over-fist into trying to buy the stock here.
Still certainly the price action tells us the most. And don’t forget something: the price action is the king. Price action tells us exactly how to proceed, what to do. All the other secondary indicators are important – no question about it. But it’s the price action that matters the most. When price action is good and all the other indicators are not, we still pay attention to what the price is doing. And it’s making higher highs and higher lows. It’s telling us more buyers are coming in to this stock. I think this stock has got some room up to about $215-220. Maybe later on this year.
And then finally lets take a look at the cloud. The cloud is green and it’s expanding open, which means that there is some more good price action ahead for Darden.
Take a look at Darden; DRI is the symbol. Thanks so much for watching everyone, and I’ll see you guys next time.
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