CKE Restaurants (CKR)

Company

"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®, Green Burrito® and Red Burrito® restaurant brands. The CKE system includes more than 3,000 locations in 43 states and in 13 countries." (company website)

ckr(4-1)
CKR 4-month chart
ckr(4-1)_1yr
CKR 1-year chart

Sell short

29 December 2009. Sold short 300 at $8.60.

Since a September peak, CKR has been plunging, so much so that the 50-day moving average has turned south and crossed below the 200-day MA, that is still rising — barely. The December earnings didn't help either.

  • Percentage price oscillator (PPO) — above the signal line but beginning to turn down
  • Volume — except for one big-volume up-day, the higher-volume days have been mostly down.

Based on technical analysis, MarketEdge calls CKR an "avoid" in a "strong downward trend."

Buy to cover

gain Bottom line
4%

12 January 2009. Bought 300 to cover at $8.25.

There was a lot of news this morning about CKR, and it was very clear The Market approved. CKR suddenly jumped in price with a flurry of orders. Although it's still a long way from the 50-day moving average, I decided to cover to preserve the gain. I think there could very well be a short up-cycle, followed by a continuation of the downtrend, but I'm not of a mind to assume the risk. Bird in the hand, don't you know.