The Charts Have No Appetite for Domino's Pizza
The pizza giant is looking cold and soggy after second-quarter sales fell right out of the oven.
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Shares of Domino's Pizza DPZ cooled Thursday morning after second-quarter sales fell short of expectations. DPZ's unadjusted earnings per share of $4.03 beat estimates by $0.35 while revenue of $1.09 billion missed by $10 million.
How can this be happening to one of my favorite food groups?
Let's check out the charts and indicators.
In this daily bar chart of DPZ, below, I can see that prices were pulling back in the past four weeks ahead of today's earnings report to shareholders. Prices are trading below the negatively sloped 50-day moving average line. The rising 200-day moving average line intersects around $440 or so. The On-Balance-Volume (OBV) line shows weakness since early May and suggests that traders have been shifting from aggressive buyers to aggressive sellers with heavier trading volume being seen on days when DPZ has closed lower.
The Moving Average Convergence Divergence (MACD) oscillator is below the zero-line telling us that the trend is weak.
In this weekly Japanese candlestick chart of DPZ, below, I can see a number of upper shadows on the candles in June. For three weeks traders rejected the highs and then prices declined with bearish red candles. Prices are still trading above the rising 40-week moving average line. The weekly OBV line made a strong rise, but a peak may be in process from June. The MACD oscillator has crossed to the downside for a take- profit sell signal.
In this daily Point and Figure chart of DPZ, below, we look at just the price action ignoring volume and time. Here the software is presenting a possible downside price target in the $445 area.
In this weekly Point and Figure chart of DPZ, below, I can see a price target in the $405 area.
Bottom line strategy: DPZ appears to be trading sharply lower in the pre-market but that may change dramatically through the trading session. DPZ does not look like a healthy choice for purchase this morning. Oatmeal may be a better and smarter choice.
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