In the November 24th, 2014 issue of Seasonal Forecaster I covered a high probability trade setup in Brinker International (EAT), the parent of Chili's Bar & Grill and Maggiano's Little Italy restaurants.
I stated “…[the stock] has been showing signs of institutional accumulation. Its stock, symbol EAT, has recently returned to the early 2014 highs. If the stock breaks above the recent highs of 55.45 then it is likely to continue upwards.“
I detailed the seasonal pattern for this stock, which was one of the strongest patterns you'll see…
“The seasonal pattern of EAT for this time of year shows a strong track record of gains over the next 4 to 6 months. Notice that over the past 17 years, during the next 22 weeks EAT has had only one losing year.”
“Note: EAT will likely pay a dividend of $.28 per share to holders of record on 12/5/2014.
So this is a trade setup that could trigger anytime with the next week or two.“
To increase the odds of success, I wanted to wait until EAT broke above previous resistance. So my trade setup was:
“If EAT opens at or above 55.50 I will buy a normal-sized number of shares in EAT after the open, paying no more than 56.00 per share.
Objective: EAT has gained at least 6% over the next 4 months in 13 out of the last 14 years. Looking for a similar gain and time period.“
We didn't have to wait long. On the following day EAT opened at 55.25 and quickly marched upwards. The conditions were met for trade entry.
It didn't take 4 months. It has been 5 weeks, and EAT is currently up 5.9%. In addition, we received a $0.28 a share dividend on December 26th.
The stock typically pauses after each ‘step up'. EAT is currently consolidating, and may be preparing for another step up (these ‘steps' can be a sign of steady institutional accumulation).
The seasonal chart for EAT shows gains well above the average are possible. We will hold onto the position, but will certainly reevaluate the stock, and the overall market environment before Brinker announces earnings on January 28th (before the open). A positive earnings announcement could provide a good setup to add to our position for further gains.
Of course, there's much more you need to know and many more stocks you can capitalize upon each and every day. To find out more, please click on the following link: www.markettamer.com/seasonal
Copyright (C) 2015 Stock & Options Training LLC
Unless indicated otherwise, at the time of this writing, the author has no positions in any of the above-mentioned securities.
Gregg Harris is the Chief Technical Strategist at MarketTamer.com with extensive experience in the financial sector.
Gregg started out as an Engineer and brings a rigorous thinking to his financial research. Gregg's passion for finance resulted in the creation of a real-time quote system and his work has been featured nationally in publications, such as the Investment Guide magazine.
As an avid researcher, Gregg concentrates on leveraging what institutional and big money players are doing to move the market and create seasonal trend patterns. Using custom research tools, Gregg identifies stocks that are optimal for stock and options traders to exploit these trends and find the tailwinds that can propel stocks to levels that are hidden to the average trader.
The content on any of Market Tamer websites, products, or communication is for educational purposes only. Nothing in its products, services, or communications shall be construed as a solicitation and/or recommendation to buy or sell a security. Trading stocks, options, and other securities involve risk. The risk of loss in trading securities can be substantial. The risk involved with trading stocks, options and other securities are not suitable for all investors. Prior to buying or selling an option, an investor must evaluate his/her own personal financial situation and consider all relevant risk factors. See: Characteristics and Risks of Standardized Options (http://www.optionsclearing.com/publications/risks/riskstoc.pdf). The www.MarketTamer.com educational training program and software services are provided to improve financial understanding.
Also on Market Tamer…
Follow Us on Facebook