Domino's Pizza, Inc. ( DPZ) opened with a big gap to the downside Thursday as traders as investors reacted to the company's EPS beat and revenue miss. I was not a fan of DPZ back on October 13, so let's look at the charts again.
In this updated daily bar chart of DPZ, below, I see that prices rallied in the second half of October and into late November before turning lower again. Prices are retesting the October lows and trade below the declining 50-day and 200-day moving average lines. The trading volume has not increased on the rallies but is up sharply on today's decline.
The On-Balance-Volume (OBV) line has been stalled the past three months. The Moving Average Convergence Divergence (MACD) oscillator has moved below the zero line for an outright sell signal.
In this weekly Japanese candlestick chart of DPZ, below, I went back 10 years to get a better sense of this stock. Prices made a major move higher from 2013 and were a 10-bagger from the lows to the peaks in 2021.
Over the past three years prices have outlined a large top formation. The "neckline" is somewhere in the $300 area. The slope of the 40-week moving average line is negative. The MACD oscillator is bearish.
In this daily Point and Figure chart of DPZ, below, I can see a potential downside price target in the $251 area.
In this weekly Point and Figure chart of DPZ, below, the software is projecting a target in the $240 area.
Bottom line strategy: In full disclosure I like pizza but rarely eat it. I am sure I am not a bearish influence on the charts but the charts are bearish nevertheless. Avoid the long side of DPZ.
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Another increasing concern for equities is that we are likely to see an 'earnings recession'.
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