Each week at ChartSmarter we like to bring to a little insight into what we do on a daily basis. We have been at it for 5 years and we love doing it. Each night we detail 7 to 8 of our favorite ideas, both long and short, for the next days session. We do NOT have a chat room, nor are we active “tweeters”. We like our business growing by word of mouth. For those who would like to see a full copy of our Monday Game Plan, email me at email@example.com.
Below we look at DRI on 3 separate occasions and how one could have initiated a new trade and added to through future triggers in a process called pyramiding. This is where one adds an existing position into strength. As technicians we frown upon adding to losing positions, or “averaging down” as losses can compound very quickly. Remember trends can last for very long periods of time on either the long or short side. As one adds to one position traditionally stops will be moved up to the break even level. Lets take a look at how this process could have looked with best of breed dining play DRI. Full disclosure we did NOT participate in this trade, it is purely for showing an example.
In our Thursday 6/4 Game Plan we took a look at the restaurant play DRI. As we mentioned DRI is becoming a leader in its space as it rests just 3% from all time highs. Accumulation has been present with weekly gains in strong volume of 5.8, 3.5 and 2% the weeks ending 3/20, 3/27 and 4/10. DRI is now higher almost 4% from the recommended trigger in our 6/4 Game Plan.
Stocks that can be bought as they take out 50 day SMA and added to above future valid base structures are DRI. DRI is a casual diner whose group has been mixed with CMG among the surprisingly weak performers. The stock is higher 11% YTD and 30% over the last one year period and sports a tasty dividend yield of 3.4%. Its latest earnings gain of 2.9% on 3/20 put 3 consecutive misses behind it as it declined 2.3, 1.5 and 3.9% on 12/16, 9/12 and 6/20. DRI is lower 5 of the last 9 weeks after a very strong 18 of 24 up week streak between the weeks ending 10/17/14-3/27/15. It currently trades just below its 50 day SMA and enter with a buy stop above at 65.65 and add to above a double bottom trigger of 67.25.