Bakery cafe operator Panera Bread Co (PNRA) rose more than five hundred percent over the course of the past five and a half years. In so doing however the stock was continually subjected to healthy mean-reversion moves that simply allowed it to cool off and thus lower the danger of a more meaningful collapse. At some point however most stocks settle into better correction patterns that last more than a few weeks, and from the developments that I am spotting on this stock’s multi-year chart it looks like such time has come for Panera Bread Co (PNRA).
To smoothen the stock’s long run-up I am using a so called logarithmic chart. In a nutshell, a logarithmic scale displays the value of price using intervals corresponding to orders of magnitude, rather than a standard linear scale. On a weekly basis the stock has now broken below the up-trend that began in 2008, which is a significant development by all accounts. Given how long the up-trend held intact, I don’t expect the stock to deteriorate in one swoop but rather would expect plenty of backing and filling, but in a fashion that allow bears to sell the rips.
From a closer-up perspective on the daily charts, Panera Bread Co (PNRA) has now meaningfully flushed below its 200 day simple moving average (red) for the first time in roughly twelve months, which coupled with the context of the above chart paints a further weak picture. In the immediate term the stock has better lateral support toward the $155 mark, where some sort of a bounce looks probable. Unless the stock can recover the long-term up-trend however, I suspect the trend continues lower.
