WEN Watch: Stunning rise, rumors abound

The flippers of square burgers and pilers of shaved beef, Wendy's / Arby's Group Inc. (WED) has traversed 8.5% low to high so far today on the second day of a huge volume spike that pushed shares traded even higher.

	trend	adx	psar	pps	macd	macd trend	sto	sto trend
WEN $4.23

It's an odd situation to see on the chart. Wednesday's volume spike, which approached double the previous day's, came on a sharp decline and recovery, five days after Person's Proprietary Signal moved into bear phase, and simultaneous with a move to bear phase by the parabolic sar.

Today, a decline, a pull up from the depths, a rise, a pullback from the heights. It is a stunningly fast turnaround in daily price action, and obviously so fast that the signals can't really keep pace. The psar and pps are huffing and puffing, out of breath, and their legs are starting to cramp.

Mid-term, WEN has been mainly down since it hit a swing high of $5.55 on April 26. On June 11 it gapped up on acquisition chit-chat, but quickly gave up all of those gains.

Why the rise today? The WEN message board over the Yahoo!-land is crackling with chatter about a possible corporate announcement after the close. But anyone who trades based on message board chit-chat, in my book, really isn't too interested in holding on to his or her money. Far better to invest in the lottery or give the cash to charity rather than trading on message board guesses.

Reversal Levels

• $4.34, +2.6%
• $4.23 <== You are here.
• $3.97, -6.2%

Long term, WEN peaked at $67.19 in 2006, and collapsed in a couple of gigantic one-day falls to its present dismal level, where it has traded sideways between about $2.60 and $5.00.

Bottom line on the near-term: It's an interesting move, but clearly one based on gossip, so it gets the Triple Caveat: Beware, Beware, Beware.

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Disclaimer

Tim Bovee, Private Trader tracks the trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment. No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decision decisions for his or her own account, and take responsibility for the consequences.

Abbreviations:

• psar - Parabolic Stop and Reverse
• adx - Average Directional Index
• pps - Person's Proprietary Signal
• ma20 - 20-day moving average
• macd - Moving Average Convergence-Divergence
• sto - Fast Stochastic

About the glance: The colors indicate the state of each signal.

• trend: Determined by the 5-day moving average, green for up, red for down, yellow for sideways
• adx: orange for above 30-up, blue for 20-down, purple for in the middle. Red is most prone to whipsaws
• psar, pps, macd: green for bull mode, red for bear
• sto: green for overbought, red for oversold, yellow for the neutral zone.