The restaurant stocks have really been a mixed group of stocks. Some of these stocks are trading at new highs and some of them are in the middle of their range for the year. The one interesting fact about the restaurant stocks is that they never made new lows with the market indexes and that is a sign of strength.
Chipotle Mexican Grill Inc (NYSE:CMG) has been a strong stock for most of 2010. This restaurant chain topped out in late June at a high of $155.00 a share. The stock sold off from that peak and traded down to $133.40 on July 7th. CMG has had a sharp bounce higher from that low pivot and is now trading at 144.14. This stock does have some resistance around the current levels and will have more around the $147.00 area. Should the stock trade above that level then the double top resistance level will come into play around $155.00 – $156.00. The one problem when trading this stock is that the daily volume is very thin. This can cause the moves in the stock to be a little stretched at times. Always use caution when trading thinly traded stocks.
McDonalds Corp (NYSE:MCD) is still one of the leading restaurant stocks around the world. This stock has had a huge rally from the July 1st pivot low. The stock is currently trading at daily resistance levels and is a little overbought short term. Should McDonalds continue to climb the stock will have more resistance at the $72.00 level. This stock still remains in good technical shape on the charts trading above all of the key moving averages. However, at this point it is prudent to wait for a pullback before jumping on board this leading stock.
Dominos Pizza Inc (NYSE:DPZ) was the leading restaurant stock in early 2010. However, after peaking on April 26th at $16.32 a share the stock dropped sharply into the July 1st time frame. Dominos Pizza Inc has daily chart resistance around the $13.00- $13.50 level in the near term. The stock is still trading sharply below it’s 2010 high which tells us every resistance area should be important. Please remember this stock is also thinly traded and that warrants some caution.
Restaurant stocks have held up well throughout 2010 compared to the major indexes. The majority of this group has bounced sharply with the major market indexes. This group can be bought after pullbacks as it is a stronger sector compared to the rest of the market.
Nicholas Santiago
Chief Market Strategist
www.InTheMoneyStocks.com
