The Wendy's Company (WEN) has traded sideways for the past six months and the rising 200-day moving average line has been tested twice in the past two months. Are prices ready to be served up higher? Let's check the condition of the charts and indicators to see if we want to place an order -- buy or sell -- now or later.
In this daily bar chart of WEN, below, we can see two sideways consolidation patterns. The first pattern lasted almost five months, from December into April. Prices traded above and below the flat 50-day moving average line, but stayed well above the rising 200-day average.
The On-Balance-Volume (OBV) line was steady the entire time. Prices finally broke out on the upside in late April and rallied until early June, when WEN started another sideways pattern. Since June, prices have traded around the $15.50 level, with dips below being bought and rallies to $16.00 being sold.
Again prices trade around the 50-day average, but the line turns low from August. The 200-day average is tested in early September and again in late October. The OBV line shows an uptrend or signs of more aggressive buying from April to October. The trend-following Moving Average Convergence Divergence (MACD) oscillator has been on both sides of the zero line, but is now poised to turn up (again) from the zero line for a tentative go long signal.
In this weekly bar chart of WEN, below, we can see that prices are above the rising 40-week average line and that the line was tested in September and October. The weekly OBV line has been rising since early 2016, and confirms the advance.
The weekly MACD oscillator has been declining since June of this year, but the two lines or averages make up the indicators look like they are narrowing towards a possible bullish crossover.
In this Point and Figure chart of WEN, below, we can see the slow climb for 2008. There is a modest price target of $18.75 shown, and a trade at $17.00 will refresh the rally.
Bottom line: WEN is up in line with the performance of the S&P 500 year to date, and looks like it can work higher in the months ahead to the $19-$20 area. This may be fast food, but the rally is likely to be slow. A close below $14 will mean we are going to send the food back to the kitchen.