The Globe and Mail

Technical analysis shows the restaurant company, whose brands include KFC and Pizza Hut, is set to rise

In our first report on Yum Brands Inc. YUM-N (February 21, 2007 - $31.03 U.S.), we suggested targets of $39 and $42 (adjusted for 2:1 split). The stock rallied to $41.73 in May, 2008 to fulfill both targets (A).

Subsequently, Yum had a sharp sell-off to $23 (B), stayed in a trading range between $23 and $33 and between $33 and $36 (dashed lines). This price action produced a bullish technical pattern known as a Duplex Horizontal. In March of this year, the stock had a breakout to $44 (C), a much needed pullback (D) and then settled into continuation pattern known as a flag formation, which consists of higher lows and lower highs (dotted lines). A rise above $44-$45 would signal the resumption of the up-trend. Only a decline below around $38 would reverse the positive status.

Point & Figure measurements provide targets of $49 and $54. The large Duplex Horizontal base supports higher targets.

Ron Meisels is a contributor to the www.NA-marketletter.com website. Monica Rizk is the senior technical analyst for Phases & Cycles Inc. They may hold shares in companies profiled. Please see the site for a glossary.