Eyeing a Meal and a Trade in Buffalo Wild Wings

• Posted by Greg Harmon
• on August 27th, 2014

Buffalo Wild Wings ($BWLD) reported earnings a couple of weeks ago and the stock price moved lower in reaction. Since that time it has done almost nothing but move sideways. With that price action now looks like a great time to prepare for a trade. Yes you read that correctly. It is moving sideways and it is ready to trade. Let me explain with a couple of pictures.

The weekly chart above contains a lot of information. First the price stopped falling at the 50 week SMA. The candlestick printed 2 weeks ago, a doji, signals a possible reversal and the ever so small move higher the following week confirms it higher. The RSI indicator at the top also stopped short of a move into bearish territory, under the blue line, and is reversing higher. This perspective give a bias to the upside, but it is the daily chart below that brings the heat.

The catalyst shows up in this chart in the Bollinger band movement. The Bollinger bands measure volatility and they moved from a $34 range to a $6 range in the matter of 6 days. A Bollinger band squeeze. Notice that they are opening up again and this is what tells you to get ready for a trade. I can not tell you which way it will go, but remember that weekly chart favors a reversal higher. So does the nearly 10% short interest. What I can say is that a move looks likely to happen very soon. Better draw up your trade plan tonight over some wings!

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