Don't Ignore This Chart!

Texas Roadhouse Might Whet Your Appetite

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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

Tom Bowley
About the author: is the Chief Market Strategist at EarningsBeats.com, where he provides stock market education, guidance, and trading strategies using a unique combination of technical, fundamental, and historical analysis. Tom provides EarningsBeats.com members with four portfolios (Model, Aggressive, Income, and Value), all designed to beat the benchmark S&P 500, and a revolving Watch List of hundreds of companies reporting strong quarterly earnings (must beat both revenue and EPS estimates) and exhibiting technical strength as well. These companies comprise EarningsBeats' annotated Strong Earnings ChartList (SECL), from which Tom trades exclusively. Tom writes a Daily Market Report (DMR) for members to include an executive summary, market outlook, sector/industry watch, and trading ideas. Learn More
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