According to This Indicator, Texas Roadhouse is About to Sizzle.

Ed Ponsi

There's an old trading axiom; amateurs create the open, and professionals create the close. How can we use this information to make money in the markets?

Amateur investors tend to be excitable. Many of them place their orders before the market opens. 

Professional institutional traders know this, and use it to their advantage. Before the open, they raise the prices for the stocks that individual investors want to buy, so that they gap higher. They also lower the prices for stocks retail traders want to sell. 

Once retail orders are filled, individual investors cross their fingers and hope for the best. Financial institutions then take control, driving markets higher or lower. 

Since institutions create the close, we should pay more attention to closing prices. That's where the Chalkin Money Flow index comes in. 

TXRH
Texas Roadhouse (TXRH) chart by TradeStation

The Chalkin Money Flow indicator, also known as the CMF index, measures closing prices vs. high prices. If the closing price for the day is at or near the high, it's assumed that institutions are buying, since they create the close. 

The CMF index, highlighted in yellow, is currently indicating accumulation in shares of Texas Roadhouse (TXRH). This is confirmed by a small cup and handle pattern, highlighted in black. 

Now look at the two dotted lines, a horizontal black line and an ascending blue line. Add those together, and we have an ascending triangle. Based on this information, Texas Roadhouse appears to be headed toward the mid-70's. 

Is there a stock, commodity, or currency that you'd like to see analyzed? Feel free to leave a message in the comments section if you have a request.

Ed Ponsi is the managing director of Barchetta Capital Management, and is the author of three books for publisher Wiley Finance. A dynamic public speaker, Ed has made appearances around the world, in such diverse locations as Singapore, Dubai, London, and New York. For more information about Ed and his work, click here.