Tuesday Evening

Too soon for this?

Tuesday Afternoon



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Tuesday Morning

Gator's Chart of the Day: DNKN

Dunkin' Brands Group, Inc. made it's all-time low (not shown on chart) back in mid December.  Since then it's been moving steadily higher and now sports a somewhat lofty 68 P/E.  The forward P/E is a bit more reasonable 24 but the PEG ratio is over 4 so it's by no means cheap.  The short ratio is under 3 so it's really not a short squeeze candidate either.  With a yield of only 1.7% you really can't expect that to provide much support.  So why am I looking at it?

After consolidating around 32 for 6 weeks the stock put on another leg higher during June and reached what looked like a climax top last week.  After three days of a pullback it gapped down on Monday and bounced from support around 33.50 and printed a pretty green hammer in an ugly tape.  Volume was a bit light but that may have been more a reflection of few sellers than a lack of buying interest.

The Trade
Noting the hook in the bottom Bollinger band I don't think you have to rush to buy as this usually indicates volatility is subsiding but if you don't own it and want some (who doesn't want a Dunkin' Donut?) this is not a bad place to take a small bite.  Since a stop would be back in congestion (32.50ish) it is likely you can get some more a bit lower in the next few days but it could just keep moving back toward 37.  In that case you would be glad you picked up a dozen to go.