Don't Ignore This Chart!

Darden Defies with a Triangle Breakout


Stocks got hammered on Tuesday with the S&P 500 falling the most this year (1.24%) and breaking below its March low. Even with the seemingly big decline, the index is still just 2.25% from an all time high. Darden Restaurants caught my attention because it did not break below its early March low. Instead, the stock surged the last eight days and broke a triangle trend line. Overall, DRI is in a long-term uptrend because the stock surged to new highs in November-December. After a 30% advance in just eight weeks, the stock was extended and ripe for a correction. A triangle unfolded as the stock worked off these overbought conditions the last three months. 

A triangle after a sharp advance is a bullish continuation pattern and a breakout would target a move to new highs. Within the triangle, there is a smaller falling wedge breakout. Notice the falling wedge is also a bullish continuation pattern and last week's breakout provided the early signal. The wedge breakout was also accompanied by an upturn in MACD. Broken resistance in the 75-76 area turns first support and I would re-evaluate my bullish stance on a close below 75. 

Thanks for tuning in and have a great day!
--Arthur Hill CMT

Plan your Trade and Trade your Plan

Arthur Hill
About the author: , CMT, is the Chief Technical Strategist at Focusing predominantly on US equities and ETFs, his systematic approach of identifying trend, finding signals within the trend, and setting key price levels has made him an esteemed market technician. Arthur has written articles for numerous financial publications including Barrons and Stocks & Commodities Magazine. In addition to his Chartered Market Technician (CMT) designation, he holds an MBA from the Cass Business School at City University in London. Learn More
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