A Quant Upgrade and Gap Puts BJ's Restaurants on a Path Higher

 | Feb 23, 2018 | 1:02 PM EST
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BJ's Restaurants, Inc. (BJRI) was upgraded today to a "Buy" rating by TheStreet's quantitative service. Regular readers of Kamich's Korner have become accustomed to me using this service to identify investment opportunities. I always tell my students at Baruch College that no investment approach is 100% perfect -- not fundamentals, not technicals and not quantitative either. But combining approaches can improve the investment decision making process, in my opinion.

Let's check the charts and indicators of BJRI to see if they look bullish.

In this daily bar chart of BJRI, below, we can see that prices have gapped sharply higher today. Our indicators were moving in a bullish direction before today's gap. Prices were above the rising 50-day simple moving average line. A bullish golden cross of the 50-day and 200-day averages can be seen in January.

The daily On-Balance-Volume (OBV) line made a low in early September when prices made their low and the line has risen from that point. A rising OBV line happens when buyers of a stock are acting more aggressively. This can be seen by heavier volume being traded on days when the stock closes higher. The Moving Average Convergence Divergence (MACD) oscillator moved above the zero line in October and is turning up now for a fresh go long signal.

In this weekly bar chart of BJRI, below, we can see that prices are above the still declining 40-week moving average line. The weekly OBV line has been improving since early September. The MACD oscillator is bullish.

In this Point and Figure chart of BJRI, below, we can see a breakout at $40.58 and a potential longer-term price target of $55.85.

Bottom line: Today's price gap to the upside creates opportunity and risk. We have an upside price target in the mid-$50's for the opportunity but it would be better to a buyer closer to support in the $40-$38 area. Aggressive traders should try to buy BJRI closer to $42 only if they can afford to risk to $38.

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