#$denn

5 Trade ideas excerpted from the detailed analysis and plan for premium subscribers:

Canadian Solar, Ticker: $CSIQ

Canadian Solar, $CSIQ, pulled back from a top in early March, finding support at the 200 day SMA. It bounced from there and has made a series of higher lows and higher highs since. Coming into the week it is rising and near prior resistance. The RSI is also turning higher with the MACD about to cross up and positive. Look for continuation to participate…..

Denny’s, Ticker: $DENN

Denny’s, $DENN, started a move higher in April, and trended up to a top in early September. It pulled back from there to the 50 day SMA and found support. Now it is rising again with the RSI moving higher and the MACD turning up. Look for continuation to participate…..

Horizon Therapeutics, Ticker: $HZNP

Horizon Therapeutics, $HZNP, drifted lower to the 200 day SMA and based there until a bounce in August. That stalled short of the prior high and pulled back. Now it is moving higher again with the RSI rising in the bullish zone and the MACD about to cross up. Look for continuation to participate…..

Marathon Petroleum, Ticker: $MPC

Marathon Petroleum, $MPC, trended lower from a top in September last year. It has bounced along the way with the last low in August. Now it is at short term resistance with the RSI rising in the bullish zone and the MACD rising and positive. Look for a push over resistance to participate…..

ServiceNow, Ticker: $NOW

ServiceNow, $NOW, rose off of a bottom in November. It gapped up in February and continued higher to a top in July. It has pulled back from there and is consolidating under resistance coming into the week. The RSI is moving higher towards the bullish zone with the MACD crossed up and about to turn positive. Look for a push over resistance to participate…..

After reviewing over 1,000 charts, I have found some good setups for the week.  These were selected and should be viewed in the context of the broad Market Macro picture reviewed Friday which with the September FOMC and Quadruple Witching behind, saw equity markets held up well until more trade issues hit Friday. Even so, the declines were minor as the index ETF’s hold near their all-time highs.

Elsewhere look for Gold to stall at 1500 while Crude Oil consolidates. The US Dollar Index is still drifting to the upside while US Treasuries bounced in their downtrend. The Shanghai Composite is consolidating the short term move higher with Emerging Markets stalling in their short term rise.

America loves breakfast, especially all day breakfast.  So maybe it was not a surprise that after reporting earnings last night Denny's ($DENN) stock is up over 7% today.  If you were holding it into earnings congratulations.  But after the long path lower and meek bounce then long consolidation it is not very likely you were involved.  Does the stock have more upside?  It looks like it.

The chart below shows the price action since making a top last August.  It found support through January and February and moved higher.  Then two months of consolidation led up to earnings.  The break of consolidation following earnings brought the price to the falling trend resistance going back to September.  That may give many pause before buying.

But it also pushed the price over the 200 day SMA for the first time since October.  The momentum indicators are bullish too, with the RSI bouncing off of the lower end of the bullish zone, and the MACD crossing up.  The Bollinger Bands® are opening to the upside too.  And the Measured Move out of the consolidation looks for 11.50.  There is potential to hit a Grand Slam in this stock still.  Protect against the 200 day SMA and if conservative wait for a move over resistance to start swinging.

McDonald’s Corp (MCD) Consumer Discretionary - Hotels, Restaurants & Leisure | Reports April 22, Before Market Opens

Key Takeaways

The Estimize consensus is calling for EPS of $1.18 on $5.86 billion in revenue, 2 cents above Wall Street on the bottom line and $13 million below on top.

New CEO Steve Easterbrook has led McDonald’s to a remarkable turnaround in 2015

All Day Breakfast and the McPick 2 promotion have been two of the company’s biggest revenue drivers lately.

What are you expecting for MCD? Get your estimate in here!

The golden arches are scheduled to report first quarter earnings this Friday, before the market opens. After missing in each quarter of 2014, McDonald’s has made a quick turnaround and is well positioned to beat for a 4th straight quarter. The Estimize consensus is calling for EPS of $1.18 on $5.86 billion in revenue, 2 cents above Wall Street on the bottom line and $13 million below on top. Compared to a year earlier, per share estimates are predicted to increase 16% but sales are forecasting a 2% loss. It's not surprising that the stock has been climbing given McDonald’s quick reversal of fortunes. In the past 12 months shares have soared 30.63% on renewed confidence. On average however, shares are largely unchanged leading up to and through earnings season. Last year, McDonald’s took an aggressive stance to reset its core business which had otherwise been failing. The first step, and perhaps most successful, was a change in leadership. In March 2015, McDonald's appointed Steve Easterbrook as CEO, and they haven’t looked back since. The company has topped expectations in each quarter under the new CEO and is well positioned to do so again. Last quarter, McDonald’s boasted a 5% increase in global comp sales and a 7% increase in operating income. Unfortunately, revenue decreased 7% during the same period, largely due to currency headwinds. Exchange rate volatility is expected to be an ongoing hinderance for McDonald’s moving forward.Some of McDonald’s most notable initiatives include the debut of All Day Breakfast and the introduction of its McPick 2 promotion. McDonald’s has noted that All Day Breakfast was the primary drive of increased traffic last quarter. The ingenuity of day long breakfast differentiates McDonald’s from direct competitors like Wendy’s and Burger King but also compete against traditional breakfast establishments such as Denny’s and IHOP.

Do you think MCD can beat estimates? There is still time to get your estimate in here!

I know that there are many market professionals that have favorite indicators that they swear by.  Some are proprietary and take into account many different measures.  Some are public like Bollinger Bands®.  And many can be adjusted in many ways to gain an edge.  But for the vast majority of you these are all worthless.  And that is because most of you use these indicators to keep you on the sidelines in cash or to put you back there.  Professionals do not use indicators that way.

I do not care if you use 1, 2 or 10 indicators in your work.  At some time (and for most of you a lot of the time) they are useless.  It is just human nature to focus more on protecting a downside loss that on continuing a winner.  That is perfectly fine with me.  The more of you that are looking for reasons to leave the market the better I will feel about the market.

Let me set a scenario for you.  Denny's ($DENN) was a hot stock the last quarter of 2014.  It moved out of a base from August to early October and rocketed higher nearly 50% by mid December.  But then the RSI was overbought and starting to move lower.  The MACD also made a double top and started rolling down.  If you sold the stock based on these changes to indicators then you locked in probably over 40%.  Not bad.  

But what if you ignored that divergence?  Since the RSI and MACD started lower the price has actually made 5 higher lows and a 3 higher highs, more than 10% above the December top and pullback.  Oh, and those indicators still are diverging.  It actually looks like they finally be right, in predicting some consolidation at least.  

Denny's is just a simple example but there are countless traders I see everyday that are pointing out their favorite indicator on the S&P 500 as a reason why you should "take some off" now.  I can only imagine that the group that started this process of buying and selling on indicators were market strategists or portfolio managers or some other function that does not actually get paid by the execution price in and out.  

Using indicators to augment your process is perfectly fine.  But you need to remember how that indicator was created.  Some genius (I'll be nice and call them that), took the actual price activity and manipulated it a million different ways until they found a great fit to a back test of data.  They may have actually played it forward and tweeked it a bit from there too.  Doesn't that bother you?  Do you want to make buy and sell decisions on the creation of a mathematical formula that used some set of price history to come up with a new number that may or may not mean something this time?  What was wrong with just using the actual price you thought was a good stop from your original plan?

Now before you all jump down my throat, yes I do use indicators.  But to confirm what I am seeing in price, or not.   I do not trade off of an extreme indicator reading.  I may trade off of an extreme price move and look at the indicator as confirming that idea.  Look at price first.  Nothing else matters to your account value.

I started talking about casual dining stocks at a conference in San Diego in October. Back then I was looking at Cracker Barrel ($CBRL) and Denny's ($DENN) among others. Many of them have moved a lot since then. Just before Christmas I gave a few more ideas in the space here.  They continue to perform well and rotate through consolidation and moves higher.

One of the originals, Denny's, is now back on my radar. It had a 40% move higher from the October time frame before consolidating in the current symmetrical triangle. A break of that higher would target the start of another leg up, with a price objective of 11.50 initially. Will it go another 40%? The upside story gains some credence from what is known as a Positive RSI Reversal that is underway in the chart.

This is when the low at 'B' is remains above the low at 'A' but the RSI at 'B' is lower than the RSI at 'A'. This phenomenon targets a move higher to 10.59, well above the break out criteria for the triangle. Look for this break out to add another restaurant to your rotation.

I filmed this clip with Phil Pearlman at Stocktoberfest San Diego in late October. The stocks I mentioned (Sonic, $SONC, Cracker Barrel, $CBRL and Denny's, $DENN) did not even wait for me to get off the plane in Ohio to start moving and have been going gang busters.

But there are entry points on others out there now. Take a look at Wendy's, $WEN, Jack in the Box, $JACK, and Red Robin Gourmet Burgers, $RRGB (discussed here), to name a few. The whole sector continues to trend higher.

I am long Sonic, Wendy's, Red Robin Gourmet Burgers and Jack in the Box, for personal and client accounts.