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The Cheesecake Factory Incorporated Message Board

  • luckyone581 luckyone581 Oct 25, 2010 9:49 AM Flag

    CAKE Chart Evaluation & Sell Mention

    CAKE - Friday closing price - 29.20

    CAKE for the past 9 years has traded 80% of the time between $20 and $30. In 2005 the stock got up as high as 39.28 and in 2008 as low as 4.96, but the $20-$30 level is the area where the stock has basically lived at for the past 10 years.

    CAKE had been on a major rally that started in Nov08 at 4.96 that reached the $30 level in April of this year. Nonetheless, the stock was unable to establish itself above $30 (got up to 30.75) and generated the first corrective phase in 2 years with a drop back down to 21.60. The stock is once again up near $30 but there doesn't seem to be any fundamental or chart reason to think the stock will be successful this time in establishing itself above the $30 level.

    On a weekly closing basis, resistance is decent to strong at 29.57. Above that level there is no resistance of consequence until 37.45 is reached. On a daily closing basis, resistance is strong at 30.46. Above that level there is no resistance of consequence until 37.41 is reached. On a weekly closing basis, supports are minor to non-existent until minor support is found at 24.66. Below that level, there is strong support down between 22.06 and 22.13. On a daily closing basis, support is minor to decent at 27,07, decent between 24.85 and 25.15 (100 and 200 day MA's) and strong down at 21.76/21.80.

    During the past 6 weeks, in conjunction with the index rally, CAKE has moved straight up from the $22 level to last week's high at 29.66. Nonetheless, with no previous resistance, the rally was not surprising. With the stock now reaching a strong 10-year level of resistance, it is unlikely the stock will move up any further unless the indexes rally.

    CAKE reported better than expected earnings on Friday. Such action is likely to see follow through on Monday with the stock probably breaking above the $30 at some point this week. Nonetheless, with the indexes starting to waver and the stock up at a known strong resistance level, the probabilities favor renewed selling coming in.

    The previous high at 30.75 has to be considered strong resistance at this time and with no support visible on the weekly chart until the $24-$25 level is reached sales of the stock offer a very good risk/reward ratio as well as a decent probability rating.

    Sales of CAKE above 30.00, using a stop loss at 30.85, and having a minimum objective of $25 offers a risk/reward ratio of at least 5-1.

    My rating on the trade is a 3.0 (on a scale of 1-5 with 5 being the strongest).

    My name is Tony and I am a chartist. I have been trading for over 30 years. In the 80's I was a broker/trader/analyst for Merrill Lynch, Dean Witter, and Pru-Bache.

    I offer an inexpensive chart evaluation service on stocks of your choice through membership to my newsletter and message board.

    “When or where do I get in? When or where do I get out? What is the trend for the next week? For the next 3 months? Where are the strong buyers and where are the strong sellers (based on past action)? What is the risk/reward ratio on my trade (based on chart objectives)? What looks good right now (chart-wise)?”

    These are some of the questions that I try to answer through chart evaluation.

    I offer a monthly service that includes a weekly newsletter with chart evaluations on 4 stocks that I believe have attractive chart patterns and good risk/reward ratios as well as 1 chart evaluation per week on a stock of your choice. Evaluations include entry and stop loss points as well as likely objectives. The service also includes membership to a message board where daily updates on all stocks and stock indexes are given. Cost of the service is only $27.95 per month. A 2-week Free Trial is offered. If you want a lesser package, I do offer one for $4.95 that only talks about the Stock Indexes.

    If you are interested in learning more about the service, click on my nick and get the website address from the profile area.

    SortNewest  |  Oldest  |  Most Replied Expand all replies
    • By the way, I do offer a "free" 2-week trial to my service where everyone can check out what I do.

      I will say one thing about myself that few other services can say. I give more daily chart information than any other service I know of. In addition, I also likely spend more time researching stocks and giving out that information in an understandable way than anyone else I know.

      It should also be said that my service is of use to everyone even if they do not follow my mentions or trade the way I do. I offer 4 free chart evaluations per month on stocks of your choice as well as update any of those stocks as requested. Many subscribers use my knowledge to trade their own stocks in their own manner. In fact, I have to subscribers that are long term fundamentalists are rarely trade in and out of stocks. Yet they use my knowledge to get involved (liquidating and best entry points) in those stocks they trade.

      Do you know many charting services that do that for you? Where you can have someone that is very knowledgeable to consult with? especially without paying an arm and a leg for the service?

    • First of all I do not analyze anything. What I do is read charts and come up with probability numbers. I then look for stocks that give me at least a 4-1 risk/reward ratios based on support/resistance levels. I go one step further and diversify my portfolio into 8-10 stocks as to have no more than 10 to 15% of the porftolio into any one stock.

      I am not trying to be right all the time. What I am trying to do is very simple, make more money than I lose.

      I can literally be wrong 80% of the time and still break even or turn a small profit.

      I have been doing this since 2003 (7 years) and I have yet to have a losing year. My average being right is 47.5%. You may think this is not good but the fact remains that my losses are small and my profits are not.

      In addition, the portfolio is "never" at risk of a collapse, no matther what happens in the market. "Preservation of capital is much more important than appreciation of capital".

      I don't care if I am right or wrong on any one trade. I take a lot of losses but they generally are less than $100 per 100 shares. Nonetheless, the profits are almost always much larger.

      I have been doing this publicly for 4 years (since Jan 2007). I publish a newsletter every Sunday evening with what I am planning to do during the week. This is a published newsletter that has mentions "before the fact". The results are real. In addition, I have a client base and message board, of which 9 of the original 13 members that joined the service in January 2007, are still with me. They can verify everything I have stated.

      Below is last months results of my trading. It will give you an idea of exactly what it is that I do. Please notice that last month was not a good month from the point of view that I had many more losing trades than winning trades, yet the end result was a profit. What better time to prove the worth of a trading approach than on a bad month.

      Status of account for 2007: Profit of $9,758 per 100 shares after losses and commissions were subtracted.
      Status of account for 2008: Profit of $14,704 per 100 shares after losses and commissions were subtracted.
      Status of account for 2009: Profit of $7,523 per 100 shares after losses and commissions were subtracted.

      Status of account for 2010, as of 9/30

      Profit of $17,542 using 100 shares per mention (after commissions & losses)

      Closed out profitable trades for October per 100 shares per mention (after commission)

      AMZN (short) $752
      AMZN (long) $106
      AMZN (short) $89
      FSLR (short) $2291
      Closed positions with increase in equity above last months close.

      MMM (short) $81
      FSLR (short) $431
      NTES (short) $77

      Total Profit for October, per 100 shares and after commissions $3827

      Closed out losing trades for October per 100 shares of each mention (including commission)

      FSLR (short) $55
      FSLR (short) $35
      GS (short) $663
      AMZN (short) $87
      GS (short) $64
      AMZN (short) $77
      V (short) $37
      BA (short) $81
      WYNN (short) $262
      NFLX (short) $392
      AXP (short) $164
      NFLX (short) $298
      Closed positions with decrease in equity below last months close.

      JNPR (short) $476
      AMZN (short) $9
      SOHU (short) $339

      Total Loss for October, per 100 shares, including commissions $2647

      Open positions in profit per 100 shares per mention as of 10/31

      CAT (short) $241
      V (short) $400
      GE (short) $29
      CAKE (short) $63
      Open positions with increase in equity above last months close.

      DCTH $130

      Total $863

      Open positions in loss per 100 shares per mention as of 10/31

      BA (short) $354
      JNPR (short) $109

      Open positions with decrease in equity below last months close.

      WFC (short) $94

      Total $557

      Status of trades for month of October per 100 shares on each mention after losses and commission subtractions.

      Profit of $1486

      Status of account/portfolio for 2010, as of 10/31
      Profit of $19018 using 100 shares traded per mention.

    • Seriously your analysis of the stock not moving through highs based upon your timetables is rough with subjectively. Cleary, you’re looking for subscriptions to your service, however nothing you have said has convinced me to pony up $$$. Charts have value and correct anaylsis of charts are one of the many seperate and individual components of investing. Enough said.

    • Investors don't seem to understand what chartists do. I continue to hear the same thing from investors "the fundamentals rule".

      I don't disagree with you at all, charts will not "normally" drive a stock one way or the other except at certain pivot points. Nonetheless, the reality is that neither you nor I will ever know all the "real" of the company, but the big boys do. And what the big boys do generally means that they have some "fundamental" reason for doing it, that neither you nor I know.

      Following the big money IS following the fundamentals as they really are. The information that is given to investors will always lack something.

      Getting down to specifics:

      The indexes have made new 25-month highs right across the board and yet............CAKE has not been able to get above the April highs at 30.75, or even get above the nighs made 2 weeks ago at 30.14, in spite of the strength seen last week in the indexes.

      What does that tell you? What do you think it means?

      It means that the fundamentals you are so relying on are not in play right now or the stock would have made new 25-month highs last week at the same time the indexes do.

      Use some "common sense" when trading. Stop getting "married" to your ideas and simply open your eyes and "intepret" what is staring you in the face. It is as simple as that.

    • Fundementals have been driving the stock....not the charts. Agree that charts can influence the "Big Traders"

    • No, I do not adjust for splits and never have in my chart studies.

      Bottom line, when a stock splits, the chart reflects that split compared with the past history as well. That makes the resistance and support levels clearly defined, in spite of the stock split.

      Also keep in mind that chart trading is usually used short-term with 2-3 weeks being the usual period in a trade. All the traders, computers included, will look at the chart and determine where the selling and buying will appear and trade off of that. As such, the support/resistance levels are being used and all traders, such as you and me, should use that information to determine where to buy and where to sell.

      By the way, I am already up $1 in profit per share and if the stock closes below 29.20 tomorrow (Friday - weekly close), I will probably bring my stop loss down to 29.88, which means I will be risking the grand total of $13 per 100 shares on the trade.

      This is what I do. It's all about money, it is all about making more than I lose, and it is about the portfolio growing every year.

      It is NOT about ego, not about being right or wrong, and it is not about proving a point. It is all about making more profits than losses overall.

    • luckyone,
      I appreciate your willingness to discuss this, but I don't think you addressed my question. Don't you make some adjustment when splits occur? I used Berkshire B because of the extreme level of its split and the recency, but for the timeframe you mentioned for CAKE, there have been 3 stock splits. I would contend that, at best, you could only go back to the last split because the liquidity in the stock has changed and generally splits portend some significant business development. If you are contending that no adjustment needs to be made, then I'll trade Berkshire B with you all the way to whatever limit you want from last year...

    • this stock is insane, the market is insane, the economy is insane. I'd agree with your reading BUT the current CAKE chart is so strong, it looks like it wants to go higher and use $30 as a new base. I'd hesitate to short it today. OTOH I don't expect it to rocket higher, so you should be able to get your stop at worst.

      • 1 Reply to whowants2be
      • Do yourself a favor and stop looking at the daily chart. If you want to see trends, the weekly chart will always be the way to go.

        The daily chart tells you where the stock is heading for the next few days or a couple of weeks at most, the weekly chart tells you where the real buying and selling is seen.

        You say the chart is so strong, well if you go back to 2006, which is 4 years, you will see that the $30 has been strong resistance throughout that period of time.

        So tell me, what is so bullishly different about the company now, than it has been for the past 4 years.

    • I shorted CAKE at 29.75. Stop loss is at 30.85 and objective is at least 24.70 but with a good chance of $20.

      I am risking $110 per 100 shares to pick up at least $505, which is about a 5-1 risk/reward ratio.

      I decided to lower my desired entry point down to 29.70-30.30 inasmuch as the stock has had some problems going up today in spite of the strength in the indexes as well as the fact that between Nov06 and Apr07 the stock made 3 important highs at 29.73, at 29.56, and at 29.78. Those were not broken until earlier this year when the stock went up to 30.75.

      Nonetheless, they are to be considered decent resistance and with the indexes having reached their "max" upside objectives within a bear market, selling it here became the best option.

      • 3 Replies to luckyone581
      • CAKE is having a spike down day today which can be considered a short-term strong negative if the stock closes near the lows of the day.

        In addition, any close below 28.77 will be a short-term sell signal that will probably drive the stock down to the 27.20 level, though on a daily closing basis, there is decent support at 28.00.

        IN addition, if the stock closes below 29.57 on Friday, the weekly chart will show a double top at 29.57/29.80 and since no support of any consequence has been built during this runup in price seen over the past 4 months from 21.56 to 30.14, drops down to the closest "previous" area of support from 2007 between 24.29 and 25.32 could be easily seen.

      • Hmm...a reply to my message, 1 minute afterward, with content that would plausibly reply to someone with a question on your service, but not at all relevant to my post. Hello, Mr. Robot!

        Quite interesting, though--what will the next reply be?

    • Tony,
      Interesting post, although it ends with an ad. I'm having a hard time deciding if it was automatically generated or not! One thing, though:

      "CAKE for the past 9 years has traded 80% of the time between $20 and $30. In 2005 the stock got up as high as 39.28 and in 2008 as low as 4.96, but the $20-$30 level is the area where the stock has basically lived at for the past 10 years."

      Apparently your method does not account for stock splits? Even though Google has made splits uncool, you still might want to check them out if you are analyzing growth stocks.

      splits in the last 10 years:
      12/9/04: 3:2
      6/19/01: 3:2
      6/9/00: 3:2

      Are we close to a split right now? No. But if you are claiming CAKE has been channeling for 10 years, you're dead wrong. CAKE is at $100 right now, split-adjusted to 10 years ago.

 
CAKE
49.79-0.46(-0.92%)May 5 4:00 PMEDT