Shares of Wingstop (WING) are down sharply Wednesday morning in reaction to disappointing earnings numbers.
Let's check out the charts to see what's going on with the stock.
In this updated daily bar chart of WING, below, we can see a sudden and swift turn to the downside. The shares gapped lower on the opening and have continued to slide. WING is trading below the rising 50-day moving average line and testing the rising 200-day moving average line. Expected support around $150 is broken.
The On-Balance-Volume (OBV) line shows the start of a turn lower and the Moving Average Convergence Divergence (MACD) oscillator has crossed to the downside for a new take profit sell signal.
In the weekly Japanese candlestick chart of WING, below, we see a bearish picture. Prices may have made a large double-top pattern with twin peaks around $170. The shares are testing the rising 40-week moving average line.
The weekly OBV line has been weak since August and with hindsight tells us that the advance from November has been on shaky ground. The MACD oscillator is pointed up (bullish) but has already started to narrow.
In this daily Point and Figure chart of WING, below, we can see a potential downside price target in the $106 area.
Bottom-line strategy: Sometimes sharp pullbacks turn out to be buying opportunities. With WING I do not expect it to be the case. This weakness probably has further to go.
