Ruth's Hospitality Group Inc. (RUTH) should be reporting its fourth-quarter results here on Friday. Let's jump over and take a look at the charts and indicators to see how they are adjusting to the Centers for Disease Control guidelines.
In this daily bar chart of RUTH, below, we can see that prices started a sustained uptrend in July. RUTH is trading above the rising 50-day moving average line as well as the positively sloped 200-day moving average line. Trading volume has been shrinking since July and that is not what old chart watchers want to see. Volume should increase in the direction of the trend.
The On-Balance-Volume (OBV) line rose from March to the middle of September, telling us that buyers of RUTH were more aggressive. Since the peak in September the OBV line has moved sideways and has not (yet) confirmed the new highs for the move up. The 12-day price momentum study in the lower panel of the chart shows lower highs from November to January and now in February. The pace of the advance has been slowing and it is a bearish divergence as prices rise and the indicator goes in another direction.
In this weekly bar chart of RUTH, below, we can see that prices were in a downtrend from 2018 to early 2020. Prices have recovered in the past 11 months and are now testing overhead resistance in the $19-$26 area from 2019. The 40-week moving average line has a positive slope and the OBV line shows a better trend than the daily chart. The 12-week price momentum indicator shows that momentum has been weakening from the middle of January.
In this daily Point and Figure chart of RUTH, below, we can see an upside price target of $25. A trade at $18.86 is likely to weaken the picture.
Bottom line strategy: With my three sons and one daughter-in-law in the food service industry I know I can get a great meal at home, so the appeal of an aged steak does not get me to dream of a trip to Ruth Chris. The stock of RUTH has risen from its March lows but momentum is waning and volume shrinking. I would pass on recommending a long position at this time.
