Just in time for the Super Bowl, Buffalo Wild Wings (NASDAQ:BWLD) came back on my radar late last week — and it looks to be setting up to the long side with juicy risk/reward.
From a longer-term perspective: Looking back to its late-2008 lows, BWLD stock remains in its uptrend. However, it rallied sharply in early 2012 and, as a result, broke out of this longer-term uptrending channel with this almost vertical leap — not unlike Apple (NASDAQ:AAPL). By mid-2012, BWLD had mean-reversed back into the longer-term trend, and it currently sits in the lower end of this uptrend.
A little more medium-term, we find Buffalo Wild Wings has a price level that it acts well around. Since summer 2011, BWLD has continually found resistance as well as support around the $70 mark; the level acted as resistance until early 2012 and acted as support ever since.
To be exact, the stock has now bounced off the $70 mark three times since mid-2012; the latest of these bounces occurred in late December 2012 and gets us to the current setup in the stock.
If we look even closer, we see that after the bounce off $70 in late December, BWLD rallied into a resistance level dating back to November 2012, which also is capped by a looming gap above (blue shaded area). In other words, this confluence of sorts lines up an area of resistance made up of three things: multi-month resistance, bottom of a down-gap from Oct. 24, and most recently the 100-day simple moving average.
After running into this resistance point, BWLD proceeded to retrace 61.8% of the late December/early January rally, which coincided with its 50-day moving average. So the stock is now stuck between its 50- and 100-day SMAs. On the day of finding support at the 61.8% Fibonacci retracement level, BWLD developed a hammer candle and pushed higher the next day with follow-through buying. This now sets the stock up for good risk/reward on the long side. Especially a break past medium-term resistance near $77 could push BWLD a good 8% higher toward $83, and hence a fill of the gap from Oct. 24.