Shake Shack Won't Be Cooking in the Months Ahead
Tight family budgets are likely to hurt restaurants like Shake Shack. How would that impact the stock price?
You've reached your free article limit
You've read 0 of 1 free Pro articles.
Shake Shack SHAK seems to have the best shakes but it also sells chicken burgers, fries, hot dogs, frozen custards, and beer and wine. In each new location, the beverage menu is customized to the local flavors of the city in which it operates. Smart. But are there some macro trends that are going to affect the stock price in the months ahead?
Let's check out a few charts and indicators.
In this daily bar chart of SHAK below, I can see that prices made a small double top in March and May. Prices have declined and are trading below the negatively-sloped 50-day moving average line. Prices are pushing into a gap from February and we could see that gap being filled. The On-Balance-Volume (OBV) line has turned lower with the price action and that suggests that traders have shifted to being aggressive sellers from being aggressive buyers. The Moving Average Convergence Divergence (MACD) oscillator is in a bearish alignment below the zero line.
In this weekly Japanese candlestick chart of SHAK below, I can see the double top pattern noted above. Prices are pointed down toward the rising 40-week moving average line. Upper shadows in the $110 area suggest that traders are rejecting the highs. The weekly OBV line has weakened over the past three months or so. The MACD oscillator has crossed to the downside for a take profits sell signal.
In this daily Point and Figure chart of SHAK below, I can see a potential downside price target in the $69 area.
In this weekly Point and Figure chart of SHAK below, I can see the same downside price target in the $69 area.
Bottom line strategy: It is Father's Day on Sunday and I would bet that some fathers will be grilling at home. Hey, that's been a popular image since the suburbs were invented. I have other plans on Sunday, but I do grill.
SHAK does a good job and its burgers are tasty but I think that tight family budgets are going to hurt restaurants like SHAK and others in the months ahead. That is not technical analysis but the charts (above) are bearish. Avoid the long side of SHAK for now.
Employees of TheStreet are prohibited from trading individual securities.