Shake Shack (SHAK) is trading to the downside this Thursday morning. Is this the start of a new trend or is it just a retest of the sideways consolidation pattern? Let's take a look.
In this daily chart of SHAK, above, we can see that declines or dips into the $35 to $30 area all year were bought. Prices were above the 50-day and the 200-day moving averages, and these averages were close to a golden cross. Moving averages are mostly calculated with closing prices, so it is too early to determine if we will break either of these averages. The On-Balance-Volume (OBV) line has been rising all year, and supported a bullish outlook for SHAK.
In this weekly chart of SHAK, above, we can see that we are dealing with a recent new issue. Even though we have a limited history, we can see that prices are above the 40-week moving average line. The weekly On-Balance-Volume line has been up since March. The Moving Average Convergence Divergence (MACD) oscillator is below zero but rising back to that level.
Bottom line: SHAK did not display a pattern of selling before today's weakness, so we are going to suggest that this dip will turn out to be a retest of the base and not the start of a new move lower.