In our last column we discussed CBS Corp. (CBS) , one of two stocks we hate for the month of October. Now we unveil or second stock to avoid this month: Yum! Brands (YUM) .
Yum is another stock that is coming off of a solid run. From November 2016 through Sept. 11 of this year, the shares gained 30%. The stock reached its all-time high just a few weeks ago.
Then over the past several days, Yum began to sell off on heavy volume. The stock broke sharply beneath its 50-day moving average (blue). On the two previous occasions when Yum violated its 50-day moving average, the stock continued to fall until it found support on its 200-day moving average (red). I suspect the stock will stop falling when it reaches that point again.
Source: TradeStation
Yum's 200-day moving average currently sits at $69.55. Since moving averages aren't static, and Yum's 200-day moving average is slowly rising, I'd anticipate a pullback to the $70 area.
Yum's difficulties center on its Pizza Hut operations. With so much competition in that space, particularly from a re-energized Domino's Pizza DPZ, Pizza Hut finds itself playing catch up.
Bottom line: Preserve those tasty gains and take some YUM off of the table.
