Darden Restaurants (DRI) is anticipated to report their latest earnings numbers before the opening of trading on Thursday. Our last review was March 22. Let's check out the charts again.
In this daily bar chart of DRI, below, we can see that prices have weakened since late March. DRI is trading below the declining 50-day moving average line and not all that far above the rising 200-day moving average line.
The On-Balance-Volume (OBV) line has weakened the past three months telling us that sellers of DRI have been more aggressive with heavier volume being traded on days when DRI has closed lower.
The trend-following Moving Average Convergence Divergence (MACD) oscillator is below the zero line in sell territory.
In this weekly Japanese candlestick chart of DRI, below, we can see a soft-looking picture. Prices have turned lower but we are not seeing lower shadows to tell us that traders are rejecting the lows, thus further declines are possible. The slope of the 40-week moving average line is still positive but not far below the market.
The weekly OBV line has been flat/neutral the past four months. The MACD oscillator has crossed to the downside for a take profit sell signal.
In this daily Point and Figure chart of DRI, below, we can see a potential downside price target in the $123 area.
In this weekly Point and Figure chart of DRI, below, we have a lower downside price target of $114.
Bottom line strategy: I drove past a nearby Olive Garden on Father's Day. The parking lot was pretty full but not back to what I would consider pre-pandemic levels. It would be unfair to blow up that one-off observation to the rest of the company but it does influence my thinking about the stock. I have no special knowledge of what numbers they are due to report. Stand aside from new longs on DRI and let's let this correction unfold.
