Traders Shouldn't Chase Sweetgreen Stock
Wall Street loves the fast casual restaurant chain but patience is the key.
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Sweetgreen Inc. SG is a fast casual restaurant chain that serves salads and Wall Street seems to be in love with its stock.
Sweetgreen's menu features unprocessed ingredients, including 30-plus plants that stay whole until they start chopping. They also minimize the addition of sugar. I did pay a visit to a Cava outlet before I reviewed its charts, but the nearest Sweetgreen restaurant to me is in Baltimore, Maryland, so I won't be doing a road trip just yet.
Let's check out the charts and indicators.
In this daily bar chart of SG below, I can see a strong rally after a relatively small base pattern. One thing that stands out at first glance are three upside price gaps since March. Prices have traded around the 50-day moving average line but have stayed above the rising 200-day line. The On-Balance-Volume (OBV) line has been moving higher since early 2024. The trading volume shows an increase since March as more investors have taken notice of the stock. The trend following Moving Average Convergence Divergence (MACD) oscillator has moved around the zero line but is currently above it.
In this weekly Japanese candlestick chart of SG below, I can see what is potentially a large saucer base pattern. Prices bottomed in the $10 to $5 area and have turned higher and trade above the rising 40-week moving average line. The On-Balance-Volume (OBV) line has made a strong move higher since November and tells us that buyers of SG have been more aggressive than sellers. The MACD oscillator is above the zero line and poised to generate a new outright buy signal.
In this daily Point and Figure chart of SG below, I can see that prices reached an upside price target in the $36 area.
In this weekly Point and Figure chart of SG below, I can see that the software has extrapolated an upside price target in the $63 area.
Bottom line strategy: I don't feel like traders should chase this stock. Traders should be patient and wait for a dip down to the $30 area before probing the long side of SG. Risk to $24.
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