The stock opened north of $171 and quickly rallied to a high of $174.85 before retreating to the mid-$160s. The move comes after the company reported fiscal fourth-quarter earnings.
Cracker Barrel reported earnings of $2.70 per share, besting expectations by 20 cents. Revenue of $787.1 million sank 2.9% year-over-year, but beat analysts' estimates by $5.2 million.
As for guidance, management expects revenue for fiscal 2020 to come in between $3.15 billion and $3.2 billion. That's ahead of consensus expectations, which stand at $3.14 billion. Management expects adjusted 2020 earnings to come in between $9.30 and $9.45 per share, again topping consensus expectations of $9.20 per share.
It's discouraging for investors to see such a pedestrian response in the share price given that management delivered a top- and bottom-line beat in the quarter and above-consensus guidance for both full-year earnings and revenue.
Despite investor disappointment, though, let's see if we can pinpoint some key levels on the chart to help find opportunities.
Trading Cracker Barrel Stock
Cracker Barrel stock rallied right up to the 23.6% retracement and quickly recoiled from this level. Despite the volatile post-earnings action, the roadmap is actually quite clear from here.
CBRL stock tested and held the 200-day moving average. Aggressive longs can consider a position in the stock with a close below Tuesday's lows as a possible stop-out. However, I'd rather see the action play out a bit more in Cracker Barrel stock.
Specifically, if the bulls are to make a charge, they will need to reclaim the 50-day moving average at $168. That will also put the stock over the 38.2% retracement. If the stock can do that, investors can look for a rally back up to the 23.6% retracement and strong resistance near $177.
Should the 200-day moving average ultimately fail as support -- either in the short term or if Cracker Barrel fails to reclaim the 50-day and begins to retreat -- I want to see a test of the $162.50 area. There, CBRL stock will find the 50% retracement, as well as an uptrend support mark (blue line) that's been in place since fourth quarter 2018 lows.
Either way, traders will have their answers soon enough. Either the 200-day holds as support and Cracker Barrel reclaims the 50-day, or it fails and we get a buy-the-dip scenario into a solid risk/reward area.
This article is commentary by an independent contributor. At the time of publication, the author had no positions in the stocks mentioned.