Yum Brands (YUM) has been in the news with its separation of Yum China Holdings (YUMC) . As a technical analyst, I am not big on reading news stories beyond the first paragraph, but it seems that Yum China has the exclusive rights in China to KFC, Pizza Hut and Taco Bell. Each stockholder of Yum Brands received a share of Yum China. I guess we do, in fact, export something to China.
Let's visit with the charts and indicators to see what we want to do -- order more or cancel our reservations.
In this twelve-month daily chart of YUM, below, we can see that the stock performed well after a bear trap in February. Notice how prices held the $48 level in November and January. Then in mid-February, YUM broke below the $48 level for just two days and then quickly reversed to the upside. People who sold YUM short below $48 got trapped as the stock rebounded and they were forced to cover and then go long.
The rally then proceeds without much concern -- with bullish moving averages and a rising On-Balance-Volume (OBV) line. A shift comes in early August, with a crossing of the moving averages in the Moving Average Convergence Divergence (MACD) oscillator. This liquidate-longs sell signal is close to the top. The $66 level stops YUM in early September and early October.
The 50-day simple moving average line turns down in early October and the daily OBV line peaks and then moves sideways. At the same time, the MACD oscillator moves below the zero line for an outright-sell signal. YUM has a band of potential support (prior resistance from April to June) in the $60 to $57 area. This area is likely to be tested in the next few weeks.
In this weekly chart of Yum, below, we have mixed signals at this point in time. The share price has come down towards the rising, 40-week moving average line. The weekly OBV line turned up in February, but not all that strongly -- and it has softened this month. In the lower panel is the weekly MACD oscillator, and you should be able to see a bearish crossover at the beginning of September. A decline to around $58 would not surprise me.
This chart, below, is a 60-minute chart of trading in YUMC, the symbol for Yum China. We don't have a lot to work with, but we can see prices trading sideways between $24 and $25.25 before pushing out to the upside. This very limited chart is likely to stay positive as long as the $24.00 is not broken.