Market Talk with Piranha is currently moving to its new home at chrisperruna.com. The new site is up and running but many of the posts need editing as the images and stock charts did not transfer successfully (thanks blogger). I will post all new entries to both blogs – Thank you for your patience while I make this change!

Tuesday, December 14, 2004

BUFFALO WLD WING (BWLD)

...This blog entry will answer a question from a potential community member about a particular stock. BWLD currently sits at $36.16 at 12:00pm.

BWLD made my daily screens on Monday night with the breakout from the weekly cup with handle (handle higher than normal) on volume 264% higher than the 50-d average.

BWLD made my screens as a young IPO last December at 23.05 (check back in the archives to locate actual post – weekly screen for last December).

I liked the stock last year and watched as it ran up to the mid $30’s before it started to form its first base which it broke out of last night.
It looked good last night but the action is the complete opposite today as the stock has reversed course in above average volume. If the stock breaks below the pivot point of $35.24, it would be a sell in my book if you bought yesterday. You can use a cushion of 7% below $35.24 but I would personally sell immediately as something is wrong. It could be the downgrade that was issued today but I don’t pay much attention to analysts as they are usually wrong or late in their assessments.

As for fundamentals, ROE is lower than preferred levels at 7-8%. A key number here would be 15% or higher. Income levels have rose along with sales year-over-year but they are not superior growth numbers.

I would wait to see what happens today and watch the next few days to see if the stock can shake off the bad news or if it has problems not yet determined on the fundamental side that the technical side is giving us clues to consider. Reversals after strong breakouts are negative, especially when they undercut the pivot point.

Piranha

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