Talking Numbers

Domino's fails to deliver, and it could get worse

Domino’s failed to deliver Thursday.

Shares of the pizza chain dropped more than 3 percent Thursday, despite reporting earnings on par with street expectations, and better than expected revenues.

(Read: Domino's Pizza 1Q earnings jump as sales rise)

Still, the stock is up 37 percent over the past year, so should you add a slice of Domino’s to your portfolio?

“We’ve now had two tests of that 150 day moving average in just the last two months. Prior to that, we hadn’t touched the 150 day in over two years,” he warned. “That tells me that momentum is eroding and the stock is going lower.”

“The chart tells me this is a stock that is going lower,” said Richard Ross of Auerbach Grayson. “I’d be a seller into any strength.”

Ross sees as much of a $25 dollar move down from current levels, and pointed out the charts moving average as a key indication of trouble.

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This chart spells trouble for Domino's.

“We’ve now had two tests of that 150 day moving average in just the last two months. Prior to that, we hadn’t touched the 150-day in over two years,” he warned. “That tells me that momentum is eroding and the stock is going lower.”

Marc Lichtenfeld of The Oxford Club shares Ross’ bearish view, and has two reasons why you shouldn’t invest in Domino’s: rising commodity prices and the stock is expensive. “I think there are better opportunities elsewhere,” he said.

Check out the video for the full discussion on CNBC “Street Signs.”

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