DPZ shares are set for a sharp pullback
The shares of Domino's Pizza, Inc. (NYSE:DPZ) are trading down 6.6% before the opening bell after the company reported weak second-quarter revenue and same-store sales. If the price action holds, this would put DPZ near the $253 area, right near the year-to-date breakeven level. The move would have them far south of a recent consolidation pattern, and below the 200-day moving average, a trendline the shares haven't close beneath in months.
Technical traders may also want to take note of the $240 region, which served as a floor during the stock's post-earnings bear gap from February. It would seem some bears already got a jump on the sell-off, since DPZ fell 4.3% yesterday.
Speaking of yesterday's trading, there was also heavy action at the July 250 and 260 puts, which now own the no. 1 and no. 3 spots on the security's top open interest positions list, and have helped drive DPZ's Schaeffer's put/call open interest ratio (SOIR) to a put-skewed 1.35. On the call side, the July 310 strike is most popular, where 1,461 contracts reside.
We'll be on the watch for reactions out of the analyst community, even though there haven't been any yet. Right now, most covering analysts have bullish ratings in place, with nine "buy" or "strong buy" recommendations on the books, compared to four "holds" and not a single "sell" rating.