BWLD and the restaurant stocks

[Pascal]

In the restaurant chains sector, SBUX is doing very well while YUM experienced an air pocket.
In between, MCD, BWLD and CMG are goin,g to report in the next two weeks.

This sector is not attracting much money.



Among the three major competitors, MCD has the worst EV pattern since the longest.
CMG looks comparatively positive, while BWLD shows a negative pattern during the bounce.
Since MCD and CMG are reporting in the next days, better not to try a trade here.

Hence, what is left is a short BWLD trade.

There is no urgency to enter that short trade today, but I would guess that if depending on the MCD/CMG reports, then BWLD will follow the same price pattern at least in the short -term until October 28.







BWLD looks interesting as a short into resistance and in the upper section of its envelope.





The sensitivity analysis shows that the higher we enter the short in the envelope the better the trade.

[jagin]

Hi Pascal,

why did you choose 150 for 'Days for probability evaluation'?

Regards

Jarek

[Pascal]

Hi Pascal,

why did you choose 150 for 'Days for probability evaluation'?

Regards

Jarek

Very good question indeed.
The stock came up as a short potential from the negative divergence scan.
The question is "how do I test the short trade"? What is the hypothesis that I want to test.

As you can see below, BWLD is in a sort of C&H pattern that broke some days ago.
To test the break, I need to see how the stock acted during the downtrend of the left side of the Cup, because the break would probably follow the same pattern.

The Breakout Calculator used the 50MA as long-term average. this means that a test of a short on a bounce while the price stays below the 50MA would have me tested all the prices below the green 50MA line, which is what I need.

150 days capture all these prices.



Pascal

[jagin]

The Breakout Calculator used the 50MA as long-term average. this means that a test of a short on a bounce while the price stays below the 50MA would have me tested all the prices below the green 50MA line, which is what I need.

150 days capture all these prices.

Thanks Pascal. Now that's clear to me.

What about: "The sensitivity analysis shows that the higher we enter the short in the envelope the better the trade." What are the signs that it is preferable to wait for price to get higher? What should we look at?

Jarek

[Pascal]

Thanks Pascal. Now that's clear to me.

What about: "The sensitivity analysis shows that the higher we enter the short in the envelope the better the trade." What are the signs that it is preferable to wait for price to get higher? What should we look at?

Jarek

This is what the stats show. But the stats also shows that the probability for the price to reach more extended levels is lower too. This means that if we wait too long for the best prices, then we might miss a good trade.

Then it is up to the trader to decide: "I want the perfect trade" or "I am ok with just a good trade"
This all depends on your portfolio situation, the way you trade,... this depends on you.

No stat will take the trade. The trader must take the trade and live with it.


Pascal