It doesn't matter whether you are in the front of the house, the back of the house, or even if you went public -- the restaurant business is tough. Shake Shack (SHAK) had a big rally and lots of media attention after going public early last year.
After a sharp rally north of $90 (chart above), SHAK has come back down to earth and then some. Some would say it is in the weeds. The chart suggests it has work to do to generate a turnaround. The On-Balance-Volume (OBV) line peaked and turned down in May, right along with the price. The 50-day moving average turned negative in July and continues to point to further declines. However, there is a bullish divergence between lower lows in price and equal lows from the momentum study in November, December and January. Prices are making lower lows and the indicator is not -- it is making equal lows. This is not as bullish as if the indicator was making higher lows, but this is what the market gives us. We would be more encouraged if we saw the OBV line turn up, but this momentum divergence tells us not to press the short side of SHAK. A turnaround has to start somewhere.