• Subscribe
  • Log In
  • Home
  • Daily Diary
  • Asset Class
    • U.S. Equity
    • Fixed Income
    • Global Equity
    • Commodities
    • Currencies
  • Sector
    • Basic Materials
    • Consumer Discretionary
    • Consumer Staples
    • Energy
    • Financial Services
    • Healthcare
    • Industrials
    • Real Estate
    • Technology
    • Telecom Services
    • Transportation
    • Utilities
  • Latest
    • Articles
    • Video
    • Columnist Conversations
    • Best Ideas
    • Stock of the Day
  • Street Notes
  • Authors
    • Doug Kass
    • Bruce Kamich
    • Jim Cramer
    • Jim "Rev Shark" DePorre
    • Helene Meisler
    • Jonathan Heller
    • - See All -
  • Options
  • RMPIA
  • Switch Product
    • Action Alerts PLUS
    • Quant Ratings
    • Real Money
    • Real Money Pro
    • Retirement
    • Stocks Under $10
    • TheStreet
    • Top Stocks
    • Trifecta Stocks
  1. Home
  2. / Investing
  3. / Stocks

Shake Shack's Big Gains May Be Getting Stale as Early Buyers Leave

This is the kind of price performance we expect from cutting-edge technology companies not a chain of burger restaurants.
By BRUCE KAMICH
Sep 26, 2019 | 11:18 AM EDT
Stocks quotes in this article: SHAK

Everyone has their favorite part of the Mad Money program on CNBC. Some viewers love Jim Cramer's animated style in an industry where boring is almost regulated. Some like the CEO interviews and his take on IPOs that they wish they could snag an allocation. The Lightning Round is a chance for fans to ask about stocks they are interested in and Wednesday night one caller asked about Shake Shack Inc. (SHAK) : "Let it come down and then make your move. Take a pass up here," was Cramer's response.

Let's take a look at the charts and indicators and maybe the menu too.

In the daily bar chart of SHAK, below, we can see a stock that has more than doubled in price in less than one year. This is the kind of price performance we come to expect from cutting-edge technology companies but this is a chain of burger restaurants. Go figure. SHAK is trading above the rising 50-day moving average line but it looks to be very extended above the rising 200-day line.

Trading volume has come in fits and starts and occasional surges, which is not the way we want to see things in the front of the house. The daily On-Balance-Volume (OBV) line only rallies from early May to late August before it begins to weaken. A weak OBV line means that sellers have become more aggressive and hints that early buyers are taking their winnings and going home.

The trend-following Moving Average Convergence Divergence (MACD) oscillator crossed to the downside in late August giving us a take profits sell signal.

In the weekly bar chart of SHAK, below, we can see that the restaurant business has its ups and downs like the decline from $70 to near $40 last year. Prices are above the rising 40-week moving average line. Based on the limited price history SHAK is extended above the 40-week line.

The weekly OBV line is showing strength from May but has leveled off again in September. Are buyers of the stock as loyal as visitors to the restaurant? Let's check further.

In this Point and Figure chart of SHAK, below, we can see a relatively nearby price target of $92 being projected. A close around $92 will give us a close below the low of the high week seen in early September. This is a quick-turning reversal pattern should it happen and it would probably precipitate further declines toward next chart support around $75.

Bottom-line strategy: Danny Meyer is a very talented businessman but stocks move in cycles and it looks like SHAK is going to correct further to the downside. Let's stand aside until we find something really special on the menu.

Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.

Employees of TheStreet are prohibited from trading individual securities.

TAGS: Investing | Stocks | Technical Analysis | Restaurants | Mad Money

More from Stocks

Stock Market Continues to Defy Conventional Wisdom

James "Rev Shark" DePorre
Jan 22, 2021 5:04 PM EST

Concerns about the action being overheated remain, but rotational action keeps the momentum going.

AMC Is a High Risk, High Reward Play

Timothy Collins
Jan 22, 2021 2:15 PM EST

Short and sweet: This is based on the high running emotions of the markets. There's little to it beyond that.

GoodRx Needs a Shot in the Arm to Improve Its Outlook

Bruce Kamich
Jan 22, 2021 2:03 PM EST

IPOs in recent months have done extremely well -- not so GDRX.

GameStop and the Dangerous Game of Gamma Squeezes

Timothy Collins
Jan 22, 2021 1:26 PM EST

What happened after Citron Research posted a video about GameStop is very troubling.

Stocks Are Well Off Early Lows, but There's Still Quite a Bit of Weakness

James "Rev Shark" DePorre
Jan 22, 2021 1:18 PM EST

There is still strong interest in stock picking which is the most positive thing about this market.

Real Money's message boards are strictly for the open exchange of investment ideas among registered users. Any discussions or subjects off that topic or that do not promote this goal will be removed at the discretion of the site's moderators. Abusive, insensitive or threatening comments will not be tolerated and will be deleted. Thank you for your cooperation. If you have questions, please contact us here.

Email

CANCEL
SUBMIT

Email sent

Thank you, your email to has been sent successfully.

DONE

Oops!

We're sorry. There was a problem trying to send your email to .
Please contact customer support to let us know.

DONE

Please Join or Log In to Email Our Authors.

Email Real Money's Wall Street Pros for further analysis and insight

Already a Subscriber? Login

Columnist Conversation

  • 11:01 AM EST JAMES "REV SHARK" DEPORRE

    This Weekend on Real Money

    I'll discuss price targets in my Saturday column.
  • 07:54 AM EST GARY BERMAN

    Friday Morning Fibocall for 1/22/2021

    SPX (Long-Term View) The 1/21/21 NEW high @ 3861...
  • 11:16 AM EST CHRIS VERSACE

    Worst Stocks to Buy for the Biden Presidency

    Biden's take on the minimum wage, likely moves on ...
  • See More

COLUMNIST TWEETS

  • A Twitter List by realmoney
About Privacy Terms of Use

© 1996-2021 TheStreet, Inc., 225 Liberty Street, 27th Floor, New York, NY 10281

Need Help? Contact Customer Service

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data & Company fundamental data provided by FactSet. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by FactSet Digital Solutions Group.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

FactSet calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.

Compare Brokers

Please Join or Log In to manage and receive alerts.

Follow Real Money's Wall Street Pros to receive real-time investing alerts

Already a Subscriber? Login