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Swing Trade Idea (CAVA) – July 16, 2024

Our bearish trade for Tuesday, July 16th is Cava Group Inc (CAVA). CAVA is part of the Consumer Staples Sector, which is pulling back from the top of an uptrend channel and performed at 0.38% over the last month. CAVA underperformed relative to its sector over the same period at -5.34%

CAVA had a strong rally for over 6 months and traded into an area of support at $100, from where it is pulling back. As it is still in an overbought condition, we expect to see further downside with the next area of support at $77. We recommend playing a Credit Spread that provides a Premium/Width of over 33%.

As a close, if CAVA were to trade above $90 for multiple days, this would invalidate our analysis and we will consider cutting losses on the trade. We will also consider cutting losses on this options trade if the value of the vertical spread moves above $7.40.