Here’s your trade in Darden Restaurants ($DRI) – June 30, 2021
DRI UBHT
I am looking at Darden ( NYSE: DRI ) today, not because I like to eat, though I do, the stock has been grinding kind of sideways. You can kind of draw the lines any way you want to get whatever you want.
I will give you my interpretation; we got a little bit of a flat bottom here, not exactly but close enough, and certainly on these pullbacks, stocks don’t behave exactly like you think they should. You are going to get violations and then recoveries, that is just the way it goes, that is just the nature of trading. But what you want to see after these violations, like this was, you want to see what happens next.
We’ve seen some stocks like JB Hunt ( NASDAQ: JBHT ), where the stock violated the 50 and then it rallied back, that’s pretty good, and then it just resumed a downtrend. It held up again and then violated again, this time the 100-day moving average. And then, oh, it’s rallying but it’s kind of stalling here, I don’t know which way it’s going to go.
What I am saying is, this was a good tell that the stock was heading lower when it made this violation of the 50. It barely got up above it, and then I remember drawing this line here as a neckline, which is why it goes to red right here. I remember when I was drawing this line noting that if the stock fell back down below this then this prior support here, the green line, would actually become new resistance on the rally back, and that is exactly what happened.
And so this is a case where you see a violation and then that violation turned out to be prescient, it turned out to be a shot across the bow to where something bad happened. With Darden ( NYSE: DRI ), you didn’t see that. You see the stock pull back and then snap back immediately and keep going higher.
I look at this violation, I look at this thing right here, I look at this as a positive development. I look at this as a good technical event that should lead to higher prices. You look at it on a weekly chart we’re certainly in consolidation, I don’t expect that to change tomorrow. But I think this is a stock that, today, you can own and be pretty comfortable with it. I think that, ultimately, it’s moving higher.
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