Just in time for the Super Bowl, Buffalo Wild Wings (BWLD) came back on my radar late last week as it looks to be setting up to the long side with juicy risk/reward.
From a longer-term perspective looking back to the lows in late 2008, the stock remains in its up-trend. In early 2012 the stock did however rally sharply and as a result broke out of this longer-term up-trending channel with this almost vertical leap (not unlike Apple Inc (AAPL). By mid 2012 the stock had mean-reversed back into the longer-term trend, and it currently sits in the lower-end of this up-trend.
A little more medium-term we find the stock has a price level which it acts well around. Since the summer of 2011 Buffalo Wild Wings (BWLD) has continually found resistance as well as support around the $70 mark; the level acted as resistance until early 2012 and acted as support ever since. To be exact, the stock has now bounced off the $70 mark three times since mid 2012, the latest of these bounces occurred in late December 2012 and gets us to the current setup in the stock.
If we look even closer up we see that after the bounce off $70 in late December, the stock rallied into a resistance level dating back to November 2012, which is also capped by a looming gap above (blue shaded area). In other words, this confluence area of sorts lines up an area of resistance made up of three things; multi-month resistance, bottom of a down-gap from October 24, and most recently also the 100 day simple moving average.
After running into this resistance point the stock proceeded to retrace 61.80% of the late December/early January rally, which coincided with its 50 day moving average). So the stock is now stuck between its 50 and 100 day simple moving averages. On the day of finding support at the 61.80% Fibonacci retracement level the stock developed a hammer candle on the day, and pushed higher the following day with folow-through buying on January 18th. This now sets the stock up for good risk/reward on the long side. Especially a break past medium-term resistance near $77 could push the stock a good 8% higher toward $83, and hence a fill of the gap from October 24.