Darden Restaurants' (DRI) stock performance so far this year has disappointed bulls. Weak technical underpinnings suggest the bear may have the upper hand going forward.
In this daily chart of DRI, above, we can see that prices have seesawed above and below the 50-day and 200-day moving averages several times in the past few months. Prices are currently below the declining 50-day average line and below the rising 200-day line after several rally failures this month to the underside of the line.
Notice the sharp increase in volume in early July, as prices slumped. This sharp increase in volume tells us that investors in DRI voted with their feet. Another interesting observation is that the On-Balance-Volume (OBV) line behaved weaker than prices - there were equal price highs in March and June for DRI, but the OBV line made a lower high. The weaker OBV line tells us that buyers were less aggressive on the second rally.
In the lower panel is the momentum study and here we can see a small bullish divergence in July and August between the lower lows in price and higher lows on the momentum study. This bullish divergence has not generated much of positive price response, however.
In this three-year weekly chart of DRI, above, we can see that prices are below the rising 40-week moving average line. The weekly OBV line has been moving sideways all year, telling us that buyers have come and gone on this timeframe. A sustained uptrend on the OBV line would be constructive and a sustained downtrend bearish. This sideways movement suggests prices could tilt in either direction from here. The weekly Moving Average Convergence Divergence (MACD) oscillator generated a liquidate longs sell signal and is close to an outright sell signal as it crosses below the zero line.
Bottom line - with most of the indicators on the daily and weekly timeframe telling us that prices are neutral or weak, we would either stand aside from longs or probe the short side of DRI with an appropriate buy stop.