Darden Restaurants (DRI) has managed to rally higher this year and the past three years in the face of a number of headwinds, but the price action and indicators in recent months suggest a shift may be underway. Let's look closer at the menu of charts.
In this daily bar chart of DRI, below, we can see that prices have made a very choppy trading pattern the past four months. Several times prices have moved up to a slight new high only to retreat quickly and retrace its gains as if the stock was very unsure of its self.
Prices have crisscrossed the rising 50-day moving average line several times and now the slope of the 50-day line has turned flat. The daily volume pattern shows volume surges as prices rally sharply but then the volume tails off.
The daily On-Balance-Volume (OBV) line shows an uneven move higher, suggesting that traders are acting more on the buy side but not in a smooth and sustained way.
The Moving Average Convergence Divergence (MACD) oscillator shows a peak in early April and weaker readings the past four months. Prices are up but the MACD oscillator is crossing the zero line for a sell signal. Interesting divergence.
In this weekly bar chart of DRI, below, we see a mixed picture. Prices have doubled in the past three years and DRI is still above the rising 40-week moving average line.
The weekly OBV line has not made a new high to confirm the price highs and the OBV line is lower than the peak of last August for a large bearish divergence.
The weekly MACD oscillator is turning lower in another large divergence versus a year ago.
In this Point and Figure chart of DRI, below, we can see a possible downside price target of $106-$107.
Bottom Line Strategy: The Olive Garden near me in central New Jersey is always busy but investors must be focusing on something else as the charts and indicators suggest weakness ahead. Maybe it will be a buying opportunity.
