The Wendy's Co. (WEN) is set to report its latest earnings numbers on Thursday. After scanning the charts I think traders look like they are taking a cautious stance ahead of the numbers. Let's get in line and order up some fast food charts.
In this daily bar chart of WEN, below, we can see a rough sideways market for WEN the past 12 months. There are a few points I want to focus on - notice how the rallies to the $18.25-$19.75 area have been been sold.
Prices and the daily On-Balance-Volume (OBV) line set highs in August. Lower price highs have been see in late November and (so far) this month. Prices rallied non-stop from the late December low but volume has not been impressive and the OBV line has only inched marginally higher - not signs of aggressive buying.
In the lower panel of this first chart is the 12-day price momentum study. Momentum has been weakening the past six weeks even as prices have moved higher. The pace of the rise is slowing.
In this weekly bar chart of WEN, below, we can see a rally from 2016 to a peak in 2018. We can also see that probes above $18 have been rejected. Prices are above the slightly rising 40-week moving average line.
The weekly OBV line shows a decline from early 2018 and the MACD oscillator just crossed to the upside for a cover shorts buy signal.
In this long-term Point and Figure chart of WEN, below, we can see a downside price target of $13.00 being projected.
Bottom line strategy: Maybe WEN will beat whatever the analysts are looking for but right now I think prices look vulnerable to a decline.