Darden Restaurants (DRI) stroked a new high on Thursday's down day. The owner of Capital Grille, LongHorn Steakhouse and Eddie V's is continuing to outperform. The chart has a few nice traits on it that deserve mention. The SCTR has been in the top 25% for most of the 18 months shown. This continuous high level of performance is nice to see. The Relative Strength in purple has been trending up the last 6 weeks. Darden broke out to new highs this week and we can see it is really starting to pull away from the $64 level which was meaningful resistance through the last year. After surging above in March, the stock came back and hovered under $64 for a month. Now it is breaking out to new highs again. During the rough market patches in October and January, the stock pulled back meaningfully with a correction in January/ February of 20% highlighted with the blue box.
The MACD is currently rolling over so investors might get a pullback in an otherwise strong trending stock. This rollover in momentum hints at waiting a few weeks for a reservation with the 'Buy' button, but it should definitely be on a watch list for an opportunistic place to buy.
The strong historical action on the SCTR suggests Darden is very good at continuously outperforming the large-cap peer group which is a hard trait to find in this market of continuous sector rotation.
Greg Schnell, CMT, MFTA