3 Big Stock Charts: Darden Restaurants, Inc. (DRI), Dr Pepper Snapple Group Inc. (DPS) and Petroleo Brasileiro SA Petrobras (ADR) (PBR)

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The market continues to split as the major indices, even sectors, continue to bifurcate, creating opportunities for both the bulls and the bears that are monitoring the technicals. Today’s Three Big Stock Charts looks at Darden Restaurants, Inc. (NYSE:DRI), Dr Pepper Snapple Group Inc. (NYSE:DPS) and Petroleo Brasileiro SA Petrobras (ADR) (NYSE:PBR) as great examples of the opportunities being created by this splintering market.

Darden Restaurants, Inc. (DRI)

161004 DRI Stock Price
Source: Chart courtesy of StockCharts.com

Signs that consumers have been pulling back on their spending aren’t showing up in the restaurants, as Darden released earnings this morning that bested Wall Street expectations. The company also announced upside guidance and a $500 million stock buyback. The result: DRI shares are moving 3.5% higher in pre-market trading.

While volatile, Darden has been a technical traders’ dream as it continues to do a very random walk higher, sticking with trends and oscillators as good timing signals. Recently, Darden stock dipped below its 20- and 50-day moving averages to test the $61 level, a mark that has held as chart support since December 2015.

Today’s move will break DRI shares back above the 20- and 50-day trendlines, which will attract technical buyers. In addition, a move above $62.15 will also put Darden stock back into bull market territory, as this is the site of its 20-month moving average.

The positive earnings should act as a technical catalyst to break DRI stock out of its tight range and build momentum towards the top of its intermediate-term range at $67.

Dr. Pepper Snapple Group Inc. (DPS)

161004 DPS Stock Price
Source: Chart courtesy of StockCharts.com

Another consumer-related company that has suffered lately is Dr. Pepper Snapple Group. DPS stock has been one of our favorites for the last three years as shares have climbed up the wall of worry to outpace the market significantly. Now, Dr. Pepper Snapple shares are pulling back to a potential technical tipping point.

Since peaking at $98, DPS shares have underperformed the market and are now sitting above the $90 level, with many tests of this round-numbered support price over the last two weeks. Multiple tests of a level without a follow through rally often suggest that the support is setting up to give way to lower prices.

This morning, Dr. Pepper Snapple received an analyst downgrade, which will add to the potential for the $90 level to break, thus moving DPS stock deeper into an intermediate-term bearish trend as shares are already below their 200-day moving average.

The ultimate “line in the sand” for Dr. Pepper Snapple is the $87 price, as this is the site of the share’s 20-month moving average. A move below this level will put DPS shares into a technical bear market and attract even more long-term sellers to this stock to book long-term profits.

Petroleo Brasileiro SA Petrobras ADR (PBR)

161004 PBR Stock Price
Source: Chart courtesy of StockCharts.com

Energy and oil companies are scrambling after the Organization of the Petroleum Exporting Countries announcement last week as the market tried to determine what will really happen with production levels. From our perspective, the technicals are telling us all we need to know. In this case, we need to know that Petroleo Brasileiro is set to move higher after testing its 50-day moving average.

PBR has waxed the rest of the market over the last three months, and it has outpaced a volatile trade in the oil sector. The result is a strong intermediate-term trend that is supportive of a continuation in higher prices for Petroleo Brasilerio. We saw PBR stock test its 50-day moving average last week, successfully, and is now headed towards a potential break above $10, a psychologically significant move.

We’ve been watching short interest on Petroleo Brasileiro shares decline from relative highs, which has helped fuel the recent rally, but there’s more to this technical trade as PBR shares have plenty of room for a slow burn higher, as indicated from the RSI, which suggests that shares are not overbought. Similarly, Petroleo Brasileiro’s momentum indicators are building strength again, suggesting that the next move may break above the $10 mark, which will certainly attract a whole new crowd of traders to PBR.

As of this writing, Johnson Research Group did not hold a position in any of the aforementioned securities.

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Article printed from InvestorPlace Media, https://investorplace.com/2016/10/3-big-stock-charts-darden-restaurants-inc-dri-dr-pepper-snapple-group-inc-dps-and-petroleo-brasileiro-sa-petrobras-adr-pbr/.

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