Buffalo Wild Wings (NASDAQ: BWLD)

Buffalo Wild Wings, Inc. engages in the ownership, operation, and franchise of restaurants primarily in the United States. It offers chicken and various food and beverage items, as well as serves bottled beers, wines, and liquor. The company operates its restaurants under Buffalo Wild Wings Grill & Bar brand name. As of October 23, 2012, it operated approximately 861 Buffalo Wild Wings locations in 48 states in the United States, as well as in Canada. Buffalo Wild Wings, Inc. was founded in 1982 and is headquartered in Minneapolis, Minnesota.

Before discussing potential trading opportunities, please take a look at the 1-year chart of BWLD (Buffalo Wild Wings, Inc.) below with my added notations:

1-year chart of BWLD (Buffalo Wild Wings, Inc.)

Over the last 7 months BWLD has commonly found support at the $70 level (blue). The stock has also been trading sideways since November even though the overall market has moved much higher during that same period of time. This inability to get “up off the mat” would seem to imply that the stock is gearing up for a break of support.

The Tale of the Tape: BWLD has been holding a key level of support at $70. A long trade could be made on a pullback to $70 with a stop placed below that level. If the stock breaks below $70 a short trade could be made with a stop set below the level.

Before making any trading decision, decide which side of the trade you believe gives you the highest probability of success. Do you prefer the short side of the market, long side, or do you want to be in the market at all? If you haven’t thought about it, review the overall indices themselves. For example, take a look at the S&P 500. Is it trending higher or lower? Has it recently broken through a key resistance or support level? Making these decisions ahead of time will help you decide which side of the trade you believe gives you the best opportunities.

No matter what your strategy or when you decide to enter, always remember to use protective stops and you’ll be around for the next trade. Capital preservation is always key!

Good luck!

Christian Tharp, CMT