Shake Shack (SHAK) is getting ready for the dinner rush tonight and its earnings report on Monday. Let's place our order and then look at the charts and indicators.
In this daily bar chart of SHAK, below, we can see that SHAK made a small double top back in June and July. The top was small but the subsequent decline took prices down near $30 over the next five months.
Prices have improved since the end of December but the indicators are not exactly pounding the tables. SHAK is back above the slightly rising 50-day moving average line but still below the rising 200-day line. A bearish death cross of these two averages can be seen at the beginning of December - well off the top.
The volume pattern and the daily On-Balance-Volume (OBV) line has been going nowhere since June so I am not getting any clues here.
The Moving Average Convergence Divergence (MACD) oscillator moved above the zero line in January but it has since narrowed and could turn down to a take profits sell signal.
In this weekly bar chart of SHAK, below, we can see a base pattern in the $30-$40 area, followed by a breakout and pullback, and then finally a rally. Prices have corrected back down to the top of the base once again but I am not seeing signs of renewed buying.
SHAK is trading below the declining 40-week moving average line but prices are not far below the line.
The weekly volume looks like it has diminished the past two months so that is not a good sign for the bulls.
The weekly OBV line has not turned up and the MACD oscillator is struggling to generate a cover shorts signal. I am not impressed.
In this Point and Figure chart of SHAK, below, we can see a nice looking base pattern and a potential upside price target of $67. A decline to $49.03 will weaken the chart.
Bottom line strategy: A good experience at a restaurant is a combination of good food and good service. A good chart, in my opinion, is a combination of positive price action and increased volume. I cannot give SHAK a good review just yet.
