Bring Back Monterey Chicken? Why I'm Not Hungry for Chili's Owner Brinker
After a sell-side recommendation, let's make up our own mind on how to trade EAT.
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Brinker International EAT is a casual dining restaurant company and home of Chili's Grill & Bar, Maggiano's Little Italy and more. KeyBank KEY recommended the stock Thursday after disappointing quarterly numbers posted after the close on Wednesday.
Let's check out the charts and indicators and make up our own mind on how to trade EAT.
In the daily bar chart of EAT, below, I can see that the shares have moved in a choppy sideways to lower pattern the past two to three months. EAT bounced to the underside of the cresting 50-day moving average line and this is a place where technically oriented traders could be sellers.
The On-Balance-Volume (OBV) line has been weak since early June and tells me of a shift by traders from aggressive buying to aggressive selling. The Moving Average Convergence Divergence (MACD) oscillator was weak for two months and is now trying to improve.
In the weekly Japanese candlestick chart of EAT, below, I see a mixed to bearish setup. A number of the recent candles have upper shadows telling me that traders have been rejecting the highs.
The weekly OBV line turned to the downside from late May. The MACD oscillator crossed to the downside for a take profit sell signal.
In this daily Point and Figure chart of EAT, below. I can see an upside price target of $96 but a trade at $56 will turn things bearish.
In this weekly Point and Figure chart of EAT, below, I can see a downside price target in the $38 area — a big difference from the daily chart above.
Bottom-line strategy: I can honestly say I have never been in any Brinker restaurants. No channel checks, sorry. Nevertheless, the latest numbers and downbeat outlook are telling me to find other trading opportunities elsewhere.
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