Red Robin Gourmet Burgers - RRGB - close: 34.13 change: -0.51

Stop Loss: 35.55
Target(s): 31.50 or 200-Ema
Current Gain/Loss: unopened
Time Frame: exit prior to the mid May earnings report
New Positions: Yes, see below

Company Description

Why We Like It:
Shares of this restaurant chain appear to have topped out. The Q1 rally peaked at resistance near $38.00 back in March. Now RRGB is slipping with a bearish trend of lower highs and lower lows. The stock garnered some positive analyst comments on CNBC today but they had little impact on the stock price.

The low today was $33.84. I am suggesting a trigger to open small bearish positions at $33.75. We'll use a stop loss at $35.55 to start. Our target is $31.50 or the exponential 200-dma, whichever RRGB hits first. We do want to keep our position size small because the most recent data listed short interest at 12% of the very small 13.3 million share float. That does raise the risk of a possible short squeeze. You may want to trade the put options to limit your risk

Trigger @ $33.75

Suggested Position: short RRGB stock @ (trigger)

- or -

buy the May $35 PUT (RRGB1219Q35) current ask $1.95

Annotated chart:

Weekly chart:

Entry on April xx at $ xx.xx
Earnings Date 05/17/12 (unconfirmed)
Average Daily Volume = 205 thousand
Listed on April 24, 2011