BJRI Trade Idea (short)

This idea was brought up by a member a few days ago and I've been keeping tabs on it since. BJRI falls in to the Consumer Discretionary Industry group, one of the groups I feel will suffer the most as the economy worsens as people have less disposable cash.

 Here's the long term Linear Regression channel, this is called a channel buster and although t looks bullish, the implications are often just the opposite.

 On an hourly chart we see a false breakout to a new high that failed and formed a consolidation triangle, that triangle has now failed, setting BJRI up as a decent short candidate.

 Here's the hourly chart, 3C has worked well showing distribution and confirmation. Note the negative divergence at the new high breakout attempt.

 The 30 min chart confirms the same.

 Here the 15 min chart confirms the false breakout and is n a leading negative divergence.

Note two consecutive tweezer top reversals.


I like the trade right here, even though there's often volatility after the first breakdown. I'd consider an initial  stop at the all time intraday highs around $56.64, that's about 5.5% risk per share, which can easily be fit in to a 2% rule and still give you a maximum position size of about 15% of portfolio (not including margin).