On Tuesday after the close, Cheesecake Factory (CAKE) provided a business update. The company announced they have re-opened about 25% of their dining rooms. In addition, the re-opened restaurants have captured approximately 75% of the prior year’s sales levels. CAKE expects to have 65% of the company’s dining rooms re-opened (with limited capacity) by mid-June. Investors celebrated the news and sent CAKE up 17% on the day. Let’s review the weekly cycle analysis.
Cheesecake Factory (CAKE) Weekly Chart – annotations by askSlim.com
At askSlim.com we use technical analysis to evaluate price charts of stocks, futures, and ETF’s. We use a combination of cycle, trend and momentum chart studies, on multiple timeframes, to present a “sum of the evidence” directional outlook in time and price.
askSlim.com Technical Briefing: The weekly cycle analysis suggests that CAKE is in a rising phase in an overall bearish weekly cycle pattern. Weekly momentum is positive. The next projected intermediate-term low is due in mid-October.
On the upside, there are Fibonacci resistance zones from 26.28 – 33.55. On the downside, there are intermediate-term supports from 23.07 – 20.12. For the bulls to gain control of the intermediate-term, we would need to see a weekly close above 38.72.
askSlim.com Sum of the Evidence: CAKE sold off 66% between the middle of February and the middle of March. Given this over-extension on the downside, the analysis suggests that the stock will likely trade in a range for an extended period of time. We would expect the stock to trade between 22 – 27 through mid-October.
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