RBD - Restaurant Brands

[BRICKS]

AT Levin the KFC was deliberate fired upon and now out of action with the police chasing the baddies ?, but puts a unite out of action for some time lucky the KFC is in full flight at the moment and with profit rising wont be effect to much properly get built in the new style
but this is always a prob when you run a Biz so security just like airlines will become another EXPENCE..

Latest at Levin store is still CLOSED..

[percy]

Latest at Levin store is still CLOSED..

Fowl news,bricks.

[Phaedrus]

I've been in and out of RBD twice, and am considering getting back in...

If you are beating simply "buying and holding" RBD, then I would advise you to continue on with your trading system. RBD is now technically "overbought" so this is definitely not a good time to buy.

....but the classic dilemma of "is the run about to finish" is daunting me...

We don't know when or where the run will finish. All we really know is that the uptrend is still strong and as yet there is no technical evidence of any weakening.

The chart says...RBD in uptrend...but I'm still not great at determining STRENGTH of uptrend...

The chart below plots a selection of technical indicators. While these are all quite conservative, none are showing any obvious weakening of the uptrend as yet.

[PhaedrusFollower]

Thanks very much P,

Since it is overbought...I will stay out and wait for the next dip.

Appreciate the chart and the additional indicators.

Will watch and learn with interest.

PF

[brettdale]

As long as KFC slaes keep shooting up, RBD will do well.

[Snoopy]

Thanks very much P,

Since it is overbought...I will stay out and wait for the next dip.

Appreciate the chart and the additional indicators.

Will watch and learn with interest.

PF

I think you guys need to get a bit more savvy on what some of these indicators you guide yourselves by mean. From Wikipedia, the classic RSI indicator, where a value of 70 indicates overbought and a value of 30 indicates underbought is defined thus:

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For each trading period an upward change (U) or downward change (D) is calculated. Up periods are characterized by the close being higher than the previous close,

U = closenow − closeprevious
D = 0
Conversely, a down period is characterized by the close being lower than the previous period's (note that D is nonetheless a positive number),

U = 0
D = closeprevious − closenow

If the last close is the same as the previous, both U and D are zero. An average for U is calculated with an "exponential moving average" using a given N-period smoothing factor, and likewise for D. The ratio of those averages is the Relative Strength,

RS= [EMAU (period of n days)]/[EMAD (period of n days)]

This is converted to a Relative Strength Index between 0 and 100.

-----------

With 'n days' set at 200 days, as Phaedrus appears to have done, what 'overbought' means is that considering previous 200 day intervals as 'rolling windows of interest', with a weighting towards the most recent price action, there have been a lot more up periods than down periods. Using the logic that 'nothing goes up and up forever' you might conclude that the longer the share price gets stronger, the more the likelihood of a significant fall. That statement has an appealing truth about it. But what the statement does not mention is that there is no consideration given to the absolute value of the 'start point' of all this share price action.

That means a share with an underlying PE of 10 that sees a share price rise due to earnings increases that still leaves it with a PE of 10, will likely have a similar RSI to a share price that reflects a PE of 15 rise due to earnings increases that still leaves it with a PE of 15. Yet there is a difference in these two cases. A share with a PE of 15 needs earnings growth to justify that share price. And a share with a PE of 10 (like RBD) does not.

Thus IMO, it is not accurate to say that a share like RBD is overbought because of an indicator like RSI, without considering the fundamentals of the company. Phaedrus's chart indicates that if we believe the long term trend line, then perhaps $1.30 would be a good entry point. I would agree with that. But the question you need to ask as an investor is, how likely is it that such an investment opportunity will present itself? $1.30 represents a projected operational PE of 6 or 7 or something. With a company that is performing as operationally strongly as RBD, I can only say 'good luck' if that is what you are waiting for.

SNOOPY

discl: hold RBD

[Phaedrus]

Snoopy, the chart as posted was prepared for the sole purpose of providing holders with EXIT signals when RBD's weakens and ends. It was never meant to provide an on-going series of ENTRY signals for those that missed out on the Buy signals back in February - hence the absence of any Buy (or Sell!) signals during the course of this splendid uptrend. Longterm holders are interested in the main uptrend and are unconcerned by minor fluctuations so any indicators used should not be too active. You don't want them signaling an exit every time the uptrend eases a little. This is accomplished by using longer time periods.

From Wikipedia, the classic RSI indicator, where a value of 70 indicates overbought and a value of 30 indicates underbought. (OverSold)

Right - that is the classic RSI. Here I have de-tuned the RSI and made it less sensitive by increasing the time period. You should also note that OverBought/OverSold thresholds are not even marked on the plot. The 50% crossover point is used to generate signals. This is fairly common practice with slower indicators.

No consideration is given to the absolute value of the 'start point' of all this share price action.

Right. That is why it is called the RELATIVE Strength Index. It measures the internal strength of a stock against itself, so we can easily see any change in strength - whether RBD's uptrend is getting (relatively) stronger or weaker.

IMO, it is not accurate to say that a share like RBD is overbought because of an indicator like RSI, without considering the fundamentals of the company.

A distinction is usually made by referring to such a stock being technically overbought.

Phaedrus's chart indicates that if we believe the long term trend line, then perhaps $1.30 would be a good entry point.

Snoopy, I repeat, that trendline was there to provide EXIT signals when the uptrend weakens. It, like all the other indicators featured, was NEVER MEANT to identify "good entry points".

With a company that is performing as operationally strongly as RBD, I can only say 'good luck' if that ($1.30) is what you are waiting for.

You miss the point completely, Snoopy, because you misunderstand the aim of that chart. IT IS FOR EXIT PURPOSES ONLY.



A different chart is required for traders or any latecomers wanting entry signals. As shown here, it could use the same indicators, but with very different parameters of course. Here is such a chart, using the default values for each indicator. You will see that 26 buy signals have been triggered since the initial Buy signals featured in the former chart - most all of them pretty good entry points. There will, of course, be more if/as/when RBD shows transient weakness. No-one would wait for a nominal "$1.30" entry that may well never come.

Note how the RSI default period of 14 days has failed to give a single buy signal so far. It is too insensitive to provide any ongoing RBD entry signals. This is easily remedied by using a shorter period (in this case 6 days) which has provided a good selection of very timely entry signals. Too many signals? Use a longer period. Too few signals? Use a shorter period.

Snoopy, from even the most cursory glance at this chart you should be able to see that buying RBD when it is technically "OverSold" gives MUCH better entries than when it is technically "OverBought". That is why PF quite sensibly said "Since it is overbought...I will stay out and wait for the next dip."

I must confess Snoopy, that I thought you were "a bit more savvy on what some of these indicators mean"!

[Snoopy]

Snoopy, the chart as posted was prepared for the sole purpose of providing holders with EXIT signals when RBD's weakens and ends. It was never meant to provide an on-going series of ENTRY signals for those that missed out on the Buy signals back in February - hence the absence of any Buy (or Sell!) signals during the course of this splendid uptrend.

Thank's for clarifying Phaedrus. In your comments on what you have now confirmed was the RBD 'exit' chart on 24th January you wrote:

If you are beating simply "buying and holding" RBD, then I would advise you to continue on with your trading system. RBD is now technically "overbought" so this is definitely not a good time to buy.

So it looked to me as though that 'exit' chart was being used in relation to buying, and I think "Phaedrus Follower" took exactly that interpretation when he wrote on 25th January:

Since it is overbought...I will stay out and wait for the next dip.

Longterm holders are interested in the main uptrend and are unconcerned by minor fluctuations so any indicators used should not be too active.

Or as I would put it, in technical terms. Look for the trendline break first and foremost. That is really what my 'buy at $1.30' comment was all about. If the trendline was respected, the share price would bounce off at around $1.30 marking a good entry point. If the share price dropped below $1.30 then the trend would have ended. To the technical analyst that would be a sell signal. Not so to the fundamental analyst, or at least *this* fundamental analyst. A share that is 'cheap' or 'dirt cheap' is a buy either way, no matter what the RSI indicator tells you.

SNOOPY

discl: hold RBD, average buy price $1.02

[Zito]

Snoopy:

"If the share price dropped below $1.30 then the trend would have ended. To the technical analyst that would be a sell signal."

Not entirely correct. A trendline break does not in and of itself constitute the end of an uptrend. An uptrend is defined as a series of higher lows and higher highs. It is quite possible (and common) for an uptrend to continue despite a trendline break sell signal. For this reason a trendline break should not be used in isolation by technical sellers as an exit strategy.

[Lizard]

Lagging the share price... but the family have switched back to Pizza Hut as "takeaway pizza of choice". Couldn't believe the difference in their pizza's. Guess they finally figured out how to make a pizza that has flavour