When money begins rotating to defense in a big way, I look for topping patterns in the market. But when we're in the midst of a full-fledged bull market - as we are now - I'd much rather search for stocks in bullish continuation patterns. That brings me to Texas Roadhouse Inc (TXRH). There is lots to like here, besides the food. Below features a very strong ascending triangle pattern on TXRH:
The recent equal price highs and rising price lows establish the key points in this ascending triangle pattern. A high volume price breakout above 51.50-52.00 would likely result in a pattern measurement to 56.50-57.00. The real beauty here is that TXRH has been showing relative strength vs. its peers over the past six weeks and the restaurant group ($DJUSRU) as a whole has been consolidating in a relative bull wedge pattern during this time frame.
A relative breakout of this wedge pattern by the DJUSRU that coincides with a price breakout in TXRH would bode very well for continuing strength in the stock.
Happy trading!
Tom
