Domino’s Pizza, Inc., through its subsidiaries, operates as a pizza delivery company in the United States and internationally. It operates through three segments: Domestic Stores, International Franchise, and Supply Chain.
Take a look at the 1-year chart of Domino’s (NYSE: DPZ) below with added notations:
Overall, DPZ has traded sideways for the past year. During that time, the stock created an important resistance level at $220 (green), which was also DPZ’s 52-week high resistance barrier. Now that DPZ has broken above that level, traders could look to enter a position on a decline back down to that $220 mark.
The Tale of the Tape: DPZ broke its 52-week resistance at $220. The possible long position on the stock would be on a pullback down to that level with a stop placed under it. A break back below $220 could negate the forecast for a move higher.
Before making any trading decision, decide which side of the trade you believe gives you the highest probability of success. Do you prefer the short side of the market, long side, or do you want to be in the market at all? If you haven’t thought about it, review the overall indices themselves. For example, take a look at the S&P 500. Is it trending higher or lower? Has it recently broken through a key resistance or support level? Making these decisions ahead of time will help you decide which side of the trade you believe gives you the best opportunities.
No matter what your strategy or when you decide to enter, always remember to use protective stops and you’ll be around for the next trade. Capital preservation is always key!
Christian Tharp, CMT