Diner Indigestion:

Some best-in-breed casual diners reported last week and left shareholders feeling a bit nauseous. MCD was an exception after reporting on 7/27 but it was firmly rejected near the very round 300 number. It is still hovering around all-time highs, although the last couple of weeks recorded WEEKLY spinning top candles, which are often a sign of fatigue. Others that are looking more fragile include WING which will REPORT Wednesday morning, it has recorded SIX straight positive earnings reactions and has lost one-quarter of its value since a bearish engulfing candle on 5/4. Below is the chart of CMG, interestingly an MCD spinoff 17 years ago, which was clipped to the tune of 10% last Thursday after releasing numbers. It was essentially trading sideways for the last 3 weeks as it absorbed the prior big earnings gap up from 4/26, but a doji from 7/18 should have been at the very least a warning. Now it appears to be in no man’s land and the very round 2000 number once supportive could become resistance. I would not be surprised to see a gap fill at 1800 from late April into year-end.

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