Is it True Restaurant Stocks at All-Time High? Part I

Restaurant sector has been performing exceptionally well past year but has not been getting much interest from the news press.  Like all other sectors, restaurant stocks had a sharp decline during the bear market, but have made a strong come back so far with some companies even reaching all time highs.  Two restaurant stocks that are near all-time highs are Buffalo Wild Wings (BWLD) and McDonald’s (MCD).
BWLD made a new all-time high recently after making up the entire loss during the bear market in early 2009.  As you can see from the chart below that BWLD has been moving sideways for several month prior to the surge in January 2010.  However, there was a quick reversal towards the previous consolidation area.  It most likely will continue its retracement back towards the consolidation level around $44, specified by the purple colored rectangle in the chart.   Once this movement is completed, then I expect BWLD to continue its breakout and move beyond $48 level.

Similar to BWLD, MCD is also another restaurant stock near all-time highs.  After suffering through the bear market, it has been consolidating for several months now.  MCD still has not experienced the breakout that we saw in BWLD.  However, it is clear from the char that MCD is trading at the top of the consolidation range and therefore is at a critical junction.  A break above $65 would signal a bullish movement.  Unfortunately, until this break happens, it would be unwise to go LONG because if there is no break from the consolidation level, then it would mean MCD is headed lower towards the bottom range of the consolidation.

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