- Exclusive Interview -

May 3, 2010 (FinancialWire) — In his Wednesday (April 28th) article featuring Financial Select Sector SPDR (NYSE: XLF) and the Healthcare Select Sector SPDR (NYSE: XLV) entitled “Market’s Momentum Run Gets Shock Therapy” (at http://www.financialwire.net/2010/04/28/markets-momentum-run-gets-shock-therapy-says-duarte/), Dr. Joe Duarte noted: “…something significant may have changed in the dynamics of what was, up until Tuesday, a significant momentum run.”. By April 30^th, the market was increasingly volatile, and Friday’s precipitous fall was even more concerning. Financialwire spoke to Dr. Duarte this weekend about many topics including the restaurant stocks including Buffalo Wildwings (NASDAQ: BWLD,) Brinker International (NYSE: EAT), Darden Inc. (NYSE: DRI) and Cheesecake Factory (NASDAQ: CAKE). And here’s what he had to say.

FW:  Joe, how do things look to you after the last few days?

JD:  I think that this market is in some kind of transition phase. It’s hard to know, just yet whether this is going to be a full-blown correction, of the 5-10% or more kind, or just another blip that will make the guys who buy stocks on dips look good once again.

FW:  What are you seeing that concerns you?

JD:  For one thing, when the market falls, you see volume rising. That’s called distribution, which in plain English means that there is more selling than buying going on. That translates itself into more easy to see things such as leadership stocks taking a tumble and, what we call in the business: "air pockets".

FW:  Tell us more about air pockets.

JD:  Sure air pockets are the big drops that you see in the price of stocks when the news is bad and everyone sells at once. That’s what you saw last week when Buffalo Wild Wings told investors that things weren’t looking as good as they had expected.

FW:  Is Buffalo Wildwings a stock that is very important?

JD:  Yes, and no.  In the big scheme of things, it’s a moderate sized restaurant chain with a niche following that has been growing steadily. But if you look at it in what I call the “first of its kind” setting, it’s very important.

FW:  Tell us more.

JD:  O.K. I think of restaurant stocks as bellwethers for the everyday economy. When people have a little cash they like to eat out. When they feel strapped, one of the first things to go is the restaurant treat.  That’s why I go to restaurants on a frequent basis, sometimes just to see how crowded they are. To me, it seems as if Buffalo Wildwings may be the “first of its kind” in reporting a cautionary tail.

FW:  Did you visit any casual dining spots this weekend?

JD:  As a matter of fact, I did. I went to Macaroni Grill and to Cheddar’s. Both are privately owned, mostly, and both are slightly upscale for casual dining. But the food is usually pretty good, and both of these two shops are usually full and have at least a 15-minute wait. 

FW:  What did you notice?

JD:  I walked right in to both places, no waiting. And aside from smaller portions on the plate, I saw a lot of empty tables, which makes me think that this is something beyond Buffalo Wildwings.

FW:  Do you think this has to do with a double-dip recession?

JD:  I’m certainly not an economist. But, I can tell you that when the table next to yours at a restaurant that was full a month ago has four waiters eating their dinner instead of customers, something’s not quite right. And the fact that Cheesecake Factory, Brinker International, and Darden shares also dropped last week, suggests that investors are increasingly cautious.

FW:  Thanks Joe

JD:  Talk soon.

Go to http://www.financialwire.net/?s=By+Dr.+Joe+Duarte for more Duarte articles.  Go to http://www.financialwire.net/2010/04/22/about-duarte/ for more about Mr. Duarte.

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