Maybe it's the Mexican food in me talking, but I'm looking at another name in that food space today, Fiesta Restaurant Group (FRGI). For those thinking I'm examining this name because of the action in Chipotle Mexican Grill (CMG), clearly you've never been to both places. Fiesta runs Taco Cabana, which is more of an upscale Taco Bell. Neither Taco Cabana nor Taco Bell is in the same stratosphere in terms of quality or taste when compared to Chipotle, so let's dismiss that thesis right away. I'm only looking at the price action in FRGI here.
FRGI stock hasn't had the best year, down almost 12%, but things may be turning. After a bounce in June, July brought us consolidation and hope. The answer for the bulls could come today in the form of a close over $54. Of course, I'd prefer to see consecutive closes over $54 just to have confirmation, but several things are working here. Note the continued higher lows in the relative strength index (RSI). It is now breaking to new highs in front of price. The RSI was also making higher lows in front of price, so this is certainly a bullish development.
Meanwhile, the force index is pushing further into the green, demonstrating buyers are coming in with some volume. Support on the pattern comes in around $52, then again just above $50. That's been where the majority of trading has been for the last three months. Should we see any close under $49, bulls should fly the white flag, likely made of "TP," and just look elsewhere for a home for their money.
If we look a bit longer term, bulls may decide to keep that leash a bit shorter and use a close under $50 for a stop, even on a daily basis. The weekly chart has big support at $50 for an ascending triangle. This is pretty much in line with our daily chart. Again, the breakout comes at $54 and I'm more than likely to focus on the daily chart for that.
The weekly chart does show us the bullish crossovers in the slow stochastics and moving average convergence divergence (MACD), with a recent retest of the slow stochastics. If the stock can remain flat or higher on Thursday and Friday, we should see the five-week simple moving average (SMA) cross above the 13-week SMA. These crosses over the past year have been the start of very big moves, with the 13-week SMA acting as a stop for a position. Again, that would put our stop at $50. Funny how sometimes it just works that way.
Earnings are out next week, so keep that in mind when looking at this one.
