It's been a rough week for tech stocks, as investment capital finally began to rotate out of that sector. Even yesterday's huge rally couldn't recoup tech's losses from earlier this week. While some money has left the tech sector, it hasn't left the market entirely.
When sector rotation occurs, capital flows from areas that have participated in the rally to those that have waited on the sidelines. Stocks that have carried the indices higher will now take a breather, while names that have been forgotten will finally get their chance to shine.
While it's been a rough week for the stars of this rally, like the FANG stocks, now investors can sink their teeth into the casual dining sector. Because many of these names haven't participated in this year's rally, they can be bought at reasonable prices.
However, not every name in this sector is equally attractive. We went through the charts to find the best opportunities in the casual dining sector right now.
First up is Brinker International (EAT) , parent company of Chili's. On Thursday, Brinker reached its highest level since July. Brinker's MACD (moving average convergence divergence) indicator presaged this move, as it has been trending higher since early September (green line). The stock's 50-day moving average (blue) is now acting as support.
The stock's advance was halted on Thursday when it slammed into its 200-day moving average (red). Brinker International hasn't closed above its 200-day moving average since Jan. 3. Since this is a major obstacle for the stock, I'd wait for Brinker to break above that moving average before buying.
A similar situation is unfolding in the chart of Cheesecake Factory (CAKE) . This stock also is leaning on its 50-day moving average (blue) for support, and is headed for an encounter with its 200-day moving average (red). CAKE's MACD has been climbing since July, and the stock is trading at its highest level in months.
Here's a stock that looks like it's ready to get cooking -- Bloomin' Brands Inc. (BLMN) , parent company of Outback Steakhouse. Bloomin' Brands has spent the past five months forming a large rounded bottom pattern. This bullish formation projects the stock to the $27 area.
The stock's MACD indicator has been climbing since August, indicating that a breakout is imminent. Bloomin' just needs to break above resistance, which is just ahead at $22 (dotted line), to get the party started.
This commentary originally appeared on Real Money Pro at 08:30 on Dec. 1. Click here to learn about this dynamic market information service for active traders.