Jack in the Box Inc. operates and franchises Jack in the Box quick-service restaurants and Qdoba Mexican Eats fast-casual restaurants primarily in the United States. As of February 17, 2016, it operated and franchised approximately 2,200 Jack in the Box restaurants in 21 states and Guam; and approximately 600 Qdoba Mexican Eats restaurants in 47 states, the District of Columbia, and Canada.
Take a look at the 1-year chart of Jack (NASDAQ: JACK) with the added notations:
After its almost year long decline, JACK started trading in a somewhat sideways move. During that time, the stock created an important level of support at $70 (red). JACK gapped lower a few weeks ago, thus breaking the $70 level. Traders could now look for that $70 level to act as resistance if approached.
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The Tale of the Tape: JACK broke a key level of support at $70. A trader could enter a short position on any rallies up to or near $70 with a stop placed above the level. If the stock were to break back above the $70 level, a long position might be entered instead.
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!
Christian Tharp, CMT
Follow me on Twitter: @cmtstockcoach