Olive Garden Owner Darden Still Lacks Bullish Ingredients

During Tuesday’s Mad Money program host Jim Cramer told viewers that among the restaurants, he recommended Darden Restaurants Inc. (DRI) and Chipotle Mexican Grill (CMG) as big winners.

When we looked at the charts of DRI on Sept. 22 ahead of earnings, we wrote that “I find it a challenge to arrive at a clear strategy when the price action is pointed up (higher targets from the Point and Figure charts), but the On-Balance-Volume line has rolled over… with the indicators mixed I would take a neutral stand for now.”

Let’s check out DRI again.

In this daily Japanese candlestick chart of DRI, below, we can see some recent upper shadows above $105. Trading volume has declined recently and the On-Balance-Volume (OBV) line has turned a little lower suggesting a shift toward more aggressive selling.

The Moving Average Convergence Divergence (MACD) oscillator is close to a bearish crossover. 

  

 

In the weekly Japanese candlestick chart of DRI, below, we have a mixed picture. Prices are in an uptrend and trading above the bottoming 40-week moving average line. Trading volume continues to decline from the heavy action in March. The $110-$130 area looks like a large area of potential resistance. The weekly OBV line is leading the price action as the OBV line has made a new high, breaking above the highs of 2018 and 2019.

 

The MACD oscillator crossed above the zero line last month for an outright buy signal. 

 

 

 

In this Point and Figure chart of DRI, below, we can see a potential $129 price target. 

 

 

 

Bottom-line strategy: The price action since our Sept. 22 review has not moved the needle for me enough to get behind a long recommendation. Despite my reluctance, traders should probably use a sell stop at $96 to protect gains.

 

(Chipotle is a holding in TheStreet’s Trifecta Stocks portfolio. Click here to learn more about this portfolio, trading ideas and market commentary product.)

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House Democrats worry pre-election schedule lacks coronavirus relief

Speaker Nancy Pelosi has so far resisted calls for another House vote, arguing that Democrats shouldn’t do anything to undermine the priorities they passed in the $3.4 trillion package. The California Democrat has said Democrats are willing to comprise by moving up expiration dates to cut the cost to $2.2 trillion, but they’re not willing to budge on the scope of relief.

“We all know that we need to come to agreement,” Pelosi said Monday on MSNBC. “Coming to agreement is not, though, to say, ‘What’s the least we can do?  Let’s ignore the states. Let’s ignore the need for the testing. Let’s ignore the hunger. Let’s ignore the evictions.’”

As some Democrats pushed for additional House action during a biweekly caucus call last Thursday, Pelosi warned her members against falling for Republicans’ calls for a narrower package and told them not to be a “cheap date,” according to a source on the call who requested anonymity to describe the private discussion.

The 50-member bipartisan Problem Solvers Caucus, comprised of centrists in both parties, on Tuesday is releasing a $1.5 trillion bipartisan relief proposal the group has endorsed, which requires support from 75 percent of its members. The proposal stakes out compromise positions on two key sticking points, with $500 billion for state and local governments and an initial extension of federal enhanced unemployment benefits at $450 per week, but does not meet the bar Pelosi has set for a deal.

‘Some form of action’

Rank-and-file members have been careful not to question Pelosi’s negotiating strategy as they’ve started to go public with their calls for another coronavirus relief vote.

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