CKE Restaurants (CKR)

Company

CKR 1-year chart CKR 1-year chart

"CKE Restaurants, Inc., through its subsidiaries, franchisees and licensees, operates some of the most popular U.S. regional brands in quick-service and fast-casual dining, including the Carl’s Jr.®, Hardee’s®, La Salsa Fresh Mexican Grill® and Green Burrito® restaurant brands. The CKE system includes more than 3,200 locations in 43 states and in 13 countries." (company website)

CKR 6-month chart
CKR 6-month chart

Buy

CKE Restaurants missed Expectations when it reported earnings, precipitating a huge sell-off yesterday that brought the price below the 50-day moving average and busting through the lower Bollinger band. CKR had just set another new 52-week high, so the punishment was severe. It is still above the rising 200-day moving average. I believe the sell-off was an over-reaction and that the stock will recover soon. Nevertheless, it's clear that I overpaid.

  • Price momentum (PPO) — looks bad, falling steeply since last high
  • Relative strength (RSI) — fallen below neutral, but ticking up
  • Trend (ADX) — still fairly strong, but selling pressure (-DI) has crossed above buying pressure (+DI)
  • Volume — huge volume on sell-off (a catharsis?)

Based on technical analysis, MarketEdge describes CKR's chart as "strongly deteriorating" and recommends closing any existing positions.

Sell

gain Bottom line
-42%

Well, this didn't work. After hanging on far too long, I finally decided to close this positiion and take the loss. The Santa Claus rally did not carry over into the new year as it usually does, and there are very dark clouds on the economic horizon.