Brinker International, Inc., together with its subsidiaries, owns, develops, operates, and franchises casual dining restaurants in the United States and internationally. As of June 27, 2018, it owned, operated, or franchised 1,686 restaurants comprising 997 company-owned restaurants and 689 franchised restaurants under the Chili’s Grill & Bar and Maggiano’s Little Italy brand names.
Take a look at the 1-year chart of Brinker (NYSE: EAT) with the added notations:
EAT has formed a major level of support at $40 (green) over the past ten months. If the stock comes back down to that $40 level again, traders should be able to expect some sort of a bounce. However, if the $40 support was to break, lower prices should follow for EAT.
The Tale of the Tape: EAT has key support at $40. A trader could enter a long position at or around $40 with a stop placed under the level. If the stock were to break below the support, a short position could 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