In his first Executive Decision segment of "Mad Money" last Friday, Jim Cramer spoke with Kevin Hourican, president and CEO of food distributor Sysco Corp. (SYY) , which just completed an analyst day.
Sysco announced at its analyst day a $5 billion share repurchase authorization and a boost to the company's dividend. Hourican said it's clear that the recovery is finally here and restaurants are getting back into full swing.
When asked about the number of restaurants that closed during the pandemic, Hourican said Sysco estimates less than 10% of locations have been permanently closed, but it is serving 10% more customers now that the industry has consolidated.
Let's focus on Sysco's charts and indicators.
In this daily bar chart of SYY, below, we can see a weakening picture. Prices have closed below the cresting 50-day moving average line after many tests of the line the past two months. The slower-to-react 200-day moving average line still has a positive slope. The On-Balance-Volume (OBV) line shows a decline from late February, telling us that sellers of SYY have become more aggressive. The Moving Average Convergence Divergence (MACD) oscillator peaked back in December and shows a pattern of lower highs even though prices have made higher highs.
In this weekly Japanese candlestick chart of SYY, below, we can see a weekly bearish engulfing pattern at the beginning of May. This is a top reversal pattern but it does not give us a price target. The weekly OBV line shows a rising pattern into May. The MACD oscillator has struggled this calendar year and looks like it is finally crossing to the downside for a take profit sell signal.
In this daily Point and Figure chart of SYY, below, we can see a potential downside price target in the $72-$71 area.
In this weekly Point and Figure chart of SYY, below, we can see a tentative longer-term target in the $118 area.
Bottom line strategy: Traders looking to go long SYY should be patient and wait for a bit more of a pullback or correction to the low $70s. This could be a buying opportunity for longer-term strength to the $118 area.