Papa John’s, (PZZA), rode higher last week on the back of their earnings. But where their neighbor Domino’s Pizza, (DPZ), is pulling back in its move higher, Papa John’s wants to continue to fly. Time to order some new pizza, take a look.
The stock is consolidating at the high after earnings but that is not all. It was building a perfect bull flag with declining volume and printing a bullish engulfing candle as of yesterday. The consolidation has also put it back inside of the Bollinger® bands, so it is no longer stretched from a volatility perspective.
With the Relative Strength Index (RSI) holding up at 70, look for any move over the flag to start another run higher. How far can it go? One measure, the length of the run from the first consolidation box to the second suggests that 60 is possible with an interim target at 55.20. Maybe Peyton is really on to something?
As for Domino’s, the RSI is technically overbought and reversing. This is the major difference. If you do not want to sell and switch to Papa John’s, then just protect it against the 77 area, and go for two pizzas.
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