SHAK - Shake Shak Update
I wrote about Shake Shak in early October, READ IT HERE TO GET CAUGHT UP.
Since that report in early October, price has broken out of significant, well defined resistance, retested that breakout and is marching higher in perfect technical fashion.
I thought we’d revisit the chart and see how it’s looking.
By my eye…..lookin’ good!
Let’s analyze……
BUSY chart, I know. But this is what my screen looks like. Normally I shut off the noise of RSI and MACD but for this analysis, I’ve brought it to life.
SHAK
Daily Chart, including some trendlines, RSI, MACD and some fancy, cool red arrows. I wrote about the imminent breakout in October from the horizontal resistance (green horizontal line). Price has since broken out and retested which is CLASSIC technical analysis price action.
All systems GO.
But let’s look at the possibilities ahead…
Price Action and Trend lines
Trend:
SHAK is in a strong uptrend, as indicated by the upward-sloping green trend line.
The price recently pulled back after reaching highs near $140 and is now trading at $129.
Support Levels:
The green horizontal line provides significant support near $110, which was retested already as PROVEN support. This is now our floor. We go UP from here.
Next is the 50-day moving average (blue line) and the slower moving 150-day moving average (orange line), which are key levels to watch.
Resistance Levels:
The red arrows indicate a PRIOR resistance zone, which SHAK has cleared and has shown to be support. Moving forward, resistance is the current level up to $139. Beyond that is blue sky!
Indicators
RSI (Relative Strength Index):
The RSI is moving toward the neutral zone, suggesting the stock is neither overbought nor oversold.
A bounce from here could signal renewed bullish momentum.
MACD:
The MACD line is above the signal line, but the recent convergence indicates slowing bullish momentum.
It remains well above the zero line, which aligns with the longer-term bullish trend.
Volume
Volume on the recent pullback has been moderate, indicating that selling pressure may not be overwhelming. It seems to have withstood the recent market selloff so far.
Outlook
Bullish Scenario:
If SHAK holds the $125-$130 support range, it could resume its uptrend, targeting $140 and possibly higher.
Bearish Scenario:
A break below the green trend line and $125 could lead to a deeper correction, with the horizontal green line, which was prior resistance (~$110) acting as the next key support.
SOOOOOOOO………
Is SHAK a buy or a sell?
Reasons to Consider Buying
Strong Uptrend: The stock is holding above its trend line and key moving averages, which is a bullish sign.
Support Nearby: It’s testing the $125-$130 support zone. If it holds, this could be a good entry point for a move back to $140 or higher.
Volume: The recent pullback has NOT been on heavy volume, suggesting it’s more of a pause than a reversal.
Reasons to Consider Selling
Testing Support: If the stock breaks below $125 with strong selling, it could signal further downside, and so selling the break would limit losses. This is where risk management is key.
Neutral Approach
If you’re not sure, waiting for confirmation (a bounce above $130 or a break below $125) could be a safer play. Buying now without confirmation is riskier since the stock is at a key decision point.
Well, that’s about it for SHAK. Thanks for reading.
Eric