Sometimes pullbacks are incredible buying opportunities, Jim Cramer reminded viewers during his Mad Money program Tuesday night. Case in point, Tuesday's 4.6% plunge in Dine Brands Global (DIN) , owner of the Applebee's and IHOP restaurants chains.
Shares of Dine Brands are up 41% in 2019. Cramer said after years of underperformance they began to turn itself around in late 2017 and shares have been steadily marching higher since. Since 2017, Dine Brands has been executing a number of growth initiatives, including responding to changing tastes more quickly, using technology to bolster takeout sales, and know instantly which items and promotions are working and which ones aren't.
While many investors weren't happy when the company slashed its dividend, Cramer said the extra money was exactly what the company needed to invest to keep itself relevant and be prepared for the future. That future now includes things like delivery, which helped increase same-store sales 7.7% at Applebee's. Shares of DIN still trade for less than 12 times earnings and have a 2.9% dividend yield. Let's check on the charts and indicators to see what traders and investors think.
In this daily bar chart of DIN, below, we can see a bearish set-up. Prices dipped Tuesday to test the rising 50-day moving average line. The 200-day moving average line is still pointed up but not all that far below the market.
The daily On-Balance-Volume (OBV) line has been stalled the past two months or so, even as prices have risen. This is a bearish divergence and could be resolved with a price decline.
The Moving Average Convergence Divergence (MACD) oscillator has rolled over the past few weeks and could test the zero line in the days ahead.
In this weekly bar chart of DIN, below, we can see a weakening chart and indicators. Prices are above the rising 40-week moving average line but we could see a retest and break of that indicator in the near future.
The weekly OBV line is bearish and so is the MACD oscillator.
In this Point and Figure chart of DIN, below, we can see a potential downside price target of $87. If this level was reached we would be testing or breaking the rising 40-week moving average line.
Bottom line strategy: All three of our charts (above) show potential weakness. Avoid the long side of DIN for now.