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Yum! Brands Stock: Delicious Chart or Rotten Price Action?

Yum! Brands stock is working on its seventh straight daily gain. Here's how to trade it from here.

Yum! Brands  (YUM) - Get Yum! Brands Inc. Report has been on fire lately. While the stock is up just 1% on Friday, a gain today would cement the stock’s seventh straight daily gain.

In that stretch, the stock is currently up 10%, as it made a very nice double-bottom in the $108 to $110 zone.

Foodies may be talking about whether Taco Bell, a branch under the Yum umbrella, will stop selling its Mexican Pizza. But we’re over here talking about the chart.

This isn’t the only fast-food chain in the news, either.

Wendy’s  (WEN) - Get Wendy's Company (The) Report was a hot topic this week as Nelson Peltz’s Trian Partners contemplates a takeover bid.

The chart is also holding a key level as well. Can Yum! Brands stock continue to hold up after the recent run? Let’s look.

Trading Yum Stock

Daily chart of Yum! Brands stock

Daily chart of Yum! Brands stock

It’s been a choppy ride in Yum stock, but the nice lift out of the $108 area shows promise. At the very least, it gives bulls a level to measure against.

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If this level breaks and the stock closes below $108, that likely opens the door down to the 200-week moving average and potentially the $100 area.

As it stands now though, I’d love to see the stock find support in the $114 to $115 area. That takes a little momentum out of the stock, but keeps the overall trend intact for the bulls.

It also keeps it above the 10-day and 21-day moving averages.

The stock may not be going gangbusters on Friday, but its rally is enough to push Yum! Brands up through the 50-day moving average. As it hovers at the monthly high, it leaves open the possibility that we get a more meaningful rotation in June — a monthly-up rotation. 

For the moment, bulls are likely keeping a keen eye on the weekly VWAP reading, which is halting today’s rally in its tracks.

If the stock dips, $114 to $115 is key. If it doesn’t and Yum! Brands can power through, the $120 area is of immediate interest. That’s where we find the 38.2% retracement.

Above that and $124 to $125 is on the table. There we find various downtrends (blue lines), as well as the 50% retracement.

In short, let’s see how it handles this current VWAP measure. If we dip, buyers can look for support nearby. If it pushes through, they have their next upside targets handy.