Time to pick up a burger for the portfolio?

• Posted by Greg Harmon
• on April 5th, 2016

Looks good doesn’t it? That comment is invariably followed by, ‘but at the store it never looks that good’. That may be the story with Wendy’s stock ($WEN) as well. After a strong run higher in 2013 and then again to end 2014, the stock has had some troubles. 2015 saw a deep pullback and then some wild bouncing action.

The chart below shows the last 12 months of price action for the stock. Since that peak at 11.57 in May 2015, the price action has formed an ascending triangle. With its fifth touch of the triangle at resistance it gets more interesting as a possible breakout.

A breakout to the upside would give a target to 13.50. There is some resistance above that trigger but nothing above 11.57. The downside to this set up is that momentum is running hot. The RSI is touching on overbought territory, and the MACD is at levels where it has reversed in the past. Hot momentum can get hotter, and with short interest over 11% there is fuel to move higher. Will it happen this time or does it look better than it really is?

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