The famed short-seller Jim Chanos told CNBC this morning, that he has been short Dunkin’ Brands (DNKN) and a number of other restaurant brands “for about a year.”
On that news, Dunkin’ shares saw an initial 5% drop in pre-market trading, then managed to move back into the green, and as this is being written, are back down again by about 2%. So they are experiencing volatility and that should continue in the regular session.
If Chanos took a short position in Dunkin’ this time last year he is down about 13% on the trade. That’s even with the over 15% drop in the stock price off its January high this year.
And today might be a good day to make your bear case on the stock because it is poised to break out of nearly three month horizontal channel. A successful breakout could power higher prices and another retest of those January highs.
The moving average convergence/divergence indicator is tracking higher and above its centerline, reflecting improving price momentum. While the Chaikin money flow indicator, while still in negative territory, is back above its signal average and moving higher. This reading suggests an increase in buying interest.