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Special Report Darden Restaurants, Inc.: This is What a Strong Signal Looks LikeWritten by Thomas Hughes. Date Posted: 12/23/2025. 
Article Highlights - Darden Restaurants is testing long-term trend support after a steep pullback, creating a potential trend-following entry setup.
- Recent quarterly results showed solid sales and same-restaurant sales growth, alongside continued dividends and buybacks.
- Heavy institutional ownership and net inflows suggest support if the stock confirms a breakout back above key moving averages.
Darden Restaurants, Inc.'s (NYSE: DRI) stock is showing a potential trend-following entry in late December after a sharp pullback in 2025. The core thesis is straightforward: the long-term uptrend remains intact, momentum indicators are turning, and fundamentals—together with institutional positioning—create a credible path to market-beating total returns in 2026 if the stock clears nearby resistance. Darden Restaurants Pulls Back to Trend-Following Entry Point in Q4 While President Trump's official salary is $400,000 per year... his tax returns reveal he's been collecting up to $250,000 PER MONTH from one hidden source. Until recently, most Americans couldn't touch the type of investment that makes up this investment. But thanks to Executive Order 14330, that just changed. If you love investing in disruptive new companies... Discover how to invest in the fund Trump uses to collect this income >> Weekly price action for DRI stock has been in an uptrend since 2014, interrupted primarily by COVID-19 volatility. More recently, a robust 2024 advance broke price action out of an Ascending Triangle Pattern (a consolidation with flat, equal highs and progressively higher lows) and set a new all-time high. That move was driven by growth, margin strength, and capital returns. The 2025 price action looks less bullish at first glance: the stock fell about 25% from its peak to the November 2025 low. However, the uptrend itself remains unbroken. That drawdown was unwelcome but useful for trend followers: it pulled price back toward long-term support and allowed momentum gauges to unwind from overextended conditions. Indicators such as the moving average convergence divergence (MACD) and the stochastic oscillator have reset, suggesting the market has room to run. A critical exponential moving average (EMA)—the 150-day EMA—has had time to realign with price action. The takeaway in late December is that support at this key indicator is advancing, setting the stage for a rebound that has already begun. 
The MACD and stochastic indicators, which measure momentum and trend, point to a technical trend-following entry. The price rebound, together with bullish crossovers in stochastic and MACD, constitutes the entry signal and suggests an uptrending market that can retest recent highs and potentially move higher in 2026. Traders should note, however, that the late-December price action encountered a ceiling that will need to be surpassed to confirm the next leg up. The Next Hurdle: Reclaiming the 150-Day EMA to Confirm Accumulation Even with improving momentum, the chart has an obvious test ahead: reclaiming the 150-day EMA. Many investors use that line as a proxy for intermediate-term accumulation. When price is below it, rallies may stall; when price moves back above it and holds, it often signals that dip buyers are back in control. At the moment, the market appears to be digesting the rebound following the most recent earnings catalyst. A clean push above the 150-day EMA—followed by a successful retest—would provide additional confirmation for traders who want more than an initial bounce. Earnings Catalyst: What Darden Just Reported and Why It Matters The earnings results for fiscal Q2 (FQ2) showed year-over-year growth accelerating to more than 7%, outperformance versus expectations, and substantial margin expansion driven by the core business and comp-store sales. Cash flow and capital returns were healthy, including the 3.1% yielding dividend and continued share buybacks. Buybacks have reduced the share count by 1.2% in the first fiscal half and are expected to remain robust in the second fiscal half. While broader restaurant results influenced the market, analysts and institutions ultimately drive the action. The FQ2 release prompted several price-target increases and upgrades, supporting the Moderate Buy rating and implied roughly 20% upside, and institutions are buying aggressively. Institutions own more than 90% of the stock, and their 2025 activity amounted to about $2 purchased for every $1 sold. With that dynamic, DRI's downside appears limited while upside potential remains meaningful.
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