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Restaurant Stocks Signaling A Weak Consumer



March 27, 2014 – Comments (0) | RELATED TICKERS: YUM , MCD , SBUX

Many of the leading restaurant stocks have come under selling pressure recently. Generally, when the restaurant stocks decline it will signal to traders and investors that the U.S. consumer is cutting back on spending. Everyone should know that U.S. consumer spending accounts for roughly 70.0 percent of the U.S. GDP (gross domestic product). Remember, following the leading restaurant stocks will often give traders a good sense of what the economy is doing. 

Some of the leading restaurant stocks that have declined recently include Yum! Brands, Inc. (YUM), McDonald's Corp. (MCD), Starbucks Corporation (SBUX), and Chipotle Mexican Grill, Inc. (CMG). All of these leading restaurant stocks still have further downside potential on the daily charts.

The near term daily chart support level for YUM stock should be around the $70.00 level. SBUX stock has potential downside to the $68.00 area according to the daily charts. CMG stock should find daily chart support around the $541.00 level, so this leading stock still has further downside to go. All in all, this weakness in the restaurant sector is likely telling us that the U.S. consumer has lost some of their discretionary income in 2014. 

Nicholas Santiago

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