For his second "Executive Decision" segment of Wednesday's Mad Money program, Jim Cramer spoke with Todd Penegor, president and CEO of Wendy's Co. (WEN) , the nation's second largest fast food restaurant chain, which just reported earnings.
Penegor told viewers that sales of Wendy's new breakfast offerings, along with customer satisfaction, remain strong, with repeat sales as well.
Wendy's remains very optimistic for the reopening of the economy. The average number of visits per customer has fallen to 5.2 from their pre-pandemic levels of 5.5, he said, but as dining rooms reopen and people discover their breakfasts, they should easily eclipse those numbers.
We looked at WEN on Monday and wrote that "... the charts and indicators do not look that promising. Avoid for now."
Let's check out the charts again.
In the updated daily bar chart of WEN, below, we can see that price stalled at the underside of the declining 50-day moving average line. Prices finished the day on Wednesday on their low and suggest that we will see spillover weakness Thursday.
The On-Balance-Volume (OBV) line weakened and the Moving Average Convergence Divergence (MACD) oscillator remained below the zero line in sell territory.
In the weekly Japanese candlestick chart of WEN, below, we can see that the latest candle pattern shows an upper shadow and Wednesday's close was at the low of the day. This candle suggests we could see more weakness.
The OBV line has made a new low for the move down and tells us that sellers remain more aggressive. The MACD oscillator has continued even lower below the zero line.
In this daily Point and Figure chart of WEN, below, we can see an upside price target in the $24 area but we also recognize that a trade at $19.82 will be a new low for the move down and will probably turn the chart bearish.
In this second Point and Figure chart of WEN, below, we used weekly close-only price data. Here we see a price target in the $19-$18 area. Unfortunately there is no nearby support so further weakness is possible.
Bottom-line strategy: The charts of WEN have weakened since our review on Monday. Continue to avoid the long side.