Panera Bread - PNRA

In 1987 the St. Louis Bread Company opened its first location in Kirkwood, Missouri. Panera bread is the newer name for St. Louis Bread Company outside of the St. Louis area. In 1993, Au Bon Pain Co. purchased the St. Louis Bread Company and operates more than 2000 locations.

Since May of last year when the price of PNRA peaked at just under $195, share prices have been in a downtrend printing lower highs and lower lows. In August after a 25% decline from its high, a tradable bottom was formed and (at least for the time being) prices have reversed course and have established a new uptrend, now closing with higher highs and higher lows. Earlier this week strong momentum pushed the price above an important line of resistance (red horizontal line).  With that important line breached and armed with the confidence of an interim bottom in place and a new (for the time being) uptrend established, investors should be pondering if this is a good time to hop on board.

From my perspective, other than the overbought condition (see upper RSI pane), the chart pattern looks fairly attractive. Remember, overbought conditions should just raise a flag because ultimately being overbought is a sign of strength and is very desirable if you own a stock.  Who wants to buy stocks when their prices are stalling?

If I were investing in PNRA (and I am not at this time nor am I recommending you do) I would wait for a pullback in price which would have the effect of unwinding the overbought conditions. If price falls back to the red line of support (what was resistance becomes support) or above and holds above it I would consider taking a position. If price falls back below the line and stays, this would signal the sellers are wrestling control away from the buyers which would be enough to have me turn my attention to better opportunities.