While markets are still weary of the constant uncertainty of recent years, year to date all sectors in the S&P 500 are in the green. Not surprisingly given Apple’s (AAPL) strong run and heavy market capitalization the technology sector is leading to the upside. In second place however is the consumer discretionary sector; up just about 15% on the year. A strong consumer discretionary sector both in relative and absolute terms is a good sign the bulls are in control at least for another while longer.
One subgroup of the consumer discretionary sector that has gotten my attention due to the strong charts and reasonable fundamentals are the restaurants. From the Cheesecake Factory (CAKE) to Brinker International (EAT) more, the charts look to seek higher highs in the near-term if they can push through resistance.
Take Dinequity Inc (DIN) for example. The stock has had good resistance all year near $54.75 and after briefly piercing above that level in early August fell right below the level and has been consolidation there since then. From a price momentum point of view the stock has further upside as well as the stochastics indicator has come nicely out of overbought levels and looks poised to move higher again. A break and hold above $54.75 on a daily basis should setup a trade with an initial target at $60 and an initial stop near $52.