The Secret to Pizza Stocks is All in the Sauce

• Posted by Greg Harmon
• on May 23rd, 2012

If you have kids you know that there are some places you can take them for pizza and others where they either don’t like the look of the sauce or it is too spicy or something else totally irrational. I prefer to take a more objective view and look at their stock chart. A quick look at Domino’s, $DPZ, Papa John’s, $PZZA, and Pizza Inn, $PZZI, is all it takes to decide where to place the family’s take out budget.

Domino’s, $DPZ

Domino’s, $DPZ, is that last minute, it is too cold to go outside and I am drunk anyway pizza choice. And the chart looks like it. Falling from a peak at the end of the winter in a series of moves lower. The Relative Strength Index (RSI) is bearish and the Simple Moving Averages (SMA) are starting to rollover. A move under 30 and maybe you can make some money on the short side with 29 next support. Nothing doing on a take out order until it gets over 32.66.

Papa John’s, $PZZA

Papa John’s, $PZZA, is more of a family kind of restaurant and the chart shows that. Spring sports time to take the kids to dinner and this stock busts a move higher on earnings. Now in a bull flag and confirming a bullish reversal signal from the Hammer two days ago, it looks read for more upside. Resistance comes at the previous top at 50 and a move over that triggers a Measured Move to 56. That is a lot of dough.

Pizza Inn, $PZZI

This one should be a no brainer. A pizza joint that doubles a a destination hotel? No wonder it has crashed back to earth. My kids want water in the pool not pizza sauce. Seriously, Pizza Inn, $PZZI, is one very oversold stock. But the chart over the last 3 weeks tells you that it can still go lower. After hitting an RSI of 16 on April 30th all it could toss up was a short 4 day rally before falling again. And there have been many failed Hammers since then as well. With another one on Wednesday will it finally confirm and reverse, or just continue down to zero. Nothing to do here until it confirms a new higher low, over 3.10.

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