Buffalo Wild Wings: 2 Ways to Trade BWLD Stock

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Buffalo Wild Wings (NASDAQ:BWLD) fell yet again Thursday, a couple days after the company’s earnings report … but that has put BWLD stock in an interesting spot, technically speaking. Right now, it looks as though trades to both the upside and the downside could set up in the near future.

beat the bell stock investing adviceThis current setup in Buffalo Wild Wings should allow traders to define their risk (always a plus) and therefore take all emotion out of the trade.

BWLD first-quarter numbers reported Tuesday included earnings of $1.52 per share that missed analyst estimates of $1.63, and sales of $440.6 million that missed a $452.4 million bar.

Some investors might have been concerned over margin compression as the cost of chicken wings rose, yet BWLD remains a growth story and continues to gain share in the casual dining space.

After the earnings report, brokers were quick to reiterate their bullish thesis on the stock. Miller Tabak upgraded the stock to a “buy” with a $188 price target, while Baird upgraded the stock to “outperform” with a $190 price target.

BWLD Stock Charts

Looking at the price action of BWLD stock through a multiyear lens, several things stick out that help us define some levels we can use for tactical trading.

First, note that the rise in the stock in the last quarter of 2014 into early 2015 came on waning upside momentum. Second, coming into Tuesday’s earnings report, the stock’s Bollinger Bands traded tightly together, which was a reflection of the tight trading range in the stock over the past few months.

The post-earnings selloff then quickly snapped the stock out of the Bollinger Bands to the downside, which often is a precursor to a better trending move lower. On the other hand, this week’s pummeling in BWLD stock has brought it back down to a horizontal line of support (black line on the chart) in one swoop, where a bounce could materialize.

bwld stock charts weekly
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If we now zoom into the daily chart, we see that Wednesday’s selloff on BWLD stock pushed it below its rising 200-day simple moving average (red line) for the first time since last autumn, which considering how good of a reference line this moving average has been over the years, is a notable development.

While Buffalo Wild Wings again showed weakness on Thursday, it still traded within the range of Wednesday’s down day.

bwld stock charts daily
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Bulls should now wait and see whether BWLD stock can get back above Wednesday’s intraday highs, which could set up a trade to fill the down gap (i.e., a move up toward $175-$180).

Bears, on the other hand, could look to sell BWLD short on a break below Wednesday’s intraday lows, which likely would open shares up to a better-trending move into the $135 area.

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Download Serge’s trading plan in the Essence of Swing Trading e-book here. As of this writing, he did not hold a position in any of the aforementioned securities.


Article printed from InvestorPlace Media, https://investorplace.com/2015/05/buffalo-wild-wings-two-ways-trade-bwld-stock/.

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