I started talking about casual dining stocks at a conference in San Diego in October. Back then I was looking at Cracker Barrel Old Country Store (NASDAQ:CBRL) and Dennys Corporation (NASDAQ:DENN) among others. Many of them have moved a lot since then. They continue to perform well and rotate through consolidation and moves higher.
One of the originals, Denny’s, is now back on my radar. It had a 40% move higher from the October time frame before consolidating in the current symmetrical triangle. A break of that higher would target the start of another leg up, with a price objective of 11.50 initially. Will it go another 40%? The upside story gains some credence from what is known as a Positive RSI Reversal that is underway in the chart.
This is when the low at ‘B’ is remains above the low at ‘A’ but the RSI at ‘B’ is lower than the RSI at ‘A’. This phenomenon targets a move higher to 10.59, well above the break out criteria for the triangle. Look for this break out to add another restaurant to your rotation.
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