As the consumer is such a large part of the economy, it makes sense to watch the restaurant group very closely for signs of health or weakness. Wage growth over the years has been anemic but expenses such as Obamacare have been rising, taking discretionary funds out of our pockets. We can see the negative effect in names like Chipotle, Panera Bread and even McDonalds in the restaurant sector, but the poster child for beatings has been Buffalo Wild Wings – until recently.
We see the waterfall decline that started in summer with a dramatic decline on heavy turnover. That massive move in July was fully repealed by early October – and then some. Indicators and price trends were sharply bearish, but last week’s performance may be a game changer. We see good turnover (buyers) last week post earnings – that is where we see the gap in the chart. Relative strength is improving, the slope quite steep (which is positive).
The MACD is on a modest buy but still not out of the woods, the resistance just ahead at the 200 ma and the 10 ma around 150. We may stall here or perhaps lunge through that level, but a pause at overbought would be a good sign to get on board again.
