Tom Bruni's Favorite Chart in the S&P 1500 Right Now

Tom Bruni is a Technical Analyst for Allstarcharts, a technical analysis research platform founded by J.C. Parets, CMT. Bruni looks at thousands of charts every week hunting for the best looking chart setups. Today he offered up a free stock pick and chart of the week. The stock is El Pollo Loco or ($LOCO) a fast-food chain that went public a few years ago. Bruni thinks the stock is giving traders a good risk/reward opportunity here and believes the stock has upside potential.

The stock initially nearly doubled from $19 to an all-time high of $38 in its first week as a public company in mid-2014 but is currently down 75% from the IPO. Bruni even admits he had forgotten about the stock and assumed it had been delisted. Despite his lack of enthusiasm for the company Bruni is bullish. He even goes so far to say this about the chart:

“Ironically, it’s still listed and is one of the best charts in the S&P 1500.”

Bruni’s reasons for being bullish are simple yet clear. Price is above a rising 200-day moving average signaling the trend is upward.  Secondly, momentum is in a bullish range and never hit oversold conditions.

Shares of El Pollo Loco hit an all-time low at $9.05 in February of last year but have come back over 80% from those lows to $16.32 - where it closed today. Bruni compares the bottom in $LOCO to the bottom in Twitter’s chart from a few years ago. He wrote about Twitter’s bottoming pattern back in June 2018 in a post titled “How to Bottom Fish Responsibly.”

Here’s the chart he used in that post. He thinks El Pollo Loco’s chart is starting to look very similar to Twitter’s bottoming process. The long term bases look similar in the two charts and it’ll be interesting to see if things play out for El Pollo Loco in a similar way to how they played out for Twitter.