CMG trade ideas
CMG...40K of burritos???I sold a put this week in CMG as the stock is under pressure (again) and had wanted to jump in even earlier (where the green arrow is) but had not researched and checked into what was going on with the stock. While the stock did recover and have a decent swing, which would have allowed me to close......I am glad I waited as a practice for restricting those impulsive trades. I traded this name last year and had mixed results with my 401 getting decent gains and my reg-T taking a sizeable hit. I have the means to defend better this time and still hold min. 50% cash reserves. I like the stock and the company overall and have problems finding anything in the market that I don't find to be massively overpriced. Last year when I was trading CMG and selling puts weekly (pretty decent premium) I noticed that the float was shrinking but the short interest was the same. With only ~28M shares outstanding and ~4M short....this seems like it could have good potential to the upside. I got a little better trade placement by waiting but does not mean I won't get taken for a ride again, with earnings coming soon I will look to manage if the stock runs up a little into earnings or hope that IVR will stay high when/if it gaps down after earnings to help the roll. I probably should have waited and played the "after earnings" event but have been sitting on the sidelines this year with not many trades and need to take some risk in order to make some money.
cmgInteresting - retraced to .786 (chart on the left). Even if it goes lower I believe it has to rebound first. Still targeting .38 - .5 for a fast bounce target around $410.
BUY CHIPOTLE CALLS - SHORT TERM TRADERS MAY SEE 10% REBOUND3 out of 4 days since 6/26 sell-off bottom, CMG has made higher highs. More importantly, 4 out of 4 days have seen higher lows than the previous day. Buy the July 21calls for liquidity. The stock is trading in a range of about 7 points a day, with that range moving higher each day. Even so, the 14 day RSI is still at a 6 month low.
You can never use Chaikin Money flows as a sole indicator, but when paired with another it can be very useful. EVERY TIME CMG HAS BOTTOMED SINCE 2016, the Chaikin money flows have bottomed with it - ESPECIALLY when the Bollinger bands spread out and you look at the peak spreads created in the sell-offs. And so it is today, as CMF nears a 2 year low. Do not let 1 day of potential selling scare you off this trade, as I think the big sellers appear done. My bet is the regular old, huge, fund supporters are starting to show up in the afternoons..
Finally, if you are bearish or have been bearish on Chipotle like I have been for so long - this is a difficult trade to put on. The fact is - this stock has been overvalued and overpriced since 2016 and that is what we have had a hard time believing. But when you think about it - why should that change now? It shouldn't - until the 7/25 earnings, anyhow. Sometimes the hardest trades to go with are the best trades you make.
NOTE Text in chart should end with "Has Always Bounced Back At least 10% Off Sell-off Lows"
hipotle Breaks Below Trendline Support, Longer Term Trouble AheaChipotle Mexican Grill ($CMG) Daily: So last time we looked at this stock (see previous post), it managed to find support on this long upward trendline that began back in November of 2016; and since then, it has broken through that support, found some near term base around $413 and closed the day at around $416. We saw this big rolling over in the past few months, and after topping out and breaking through support, it began a precipitous drop this month. The possible good news is that this stock is oversold, and it appears to be making an effort to make a turn higher – you can see the RSI and MACD on the daily chart slowly trying to make its way higher below.
Now the bad news: the longer term weekly chart shows that the overall momentum of this stock is now to the negative side, with the weekly MACD rolling over, and the stock remains under selling pressure and under the 50 week moving average (after breaking below the trendline support). My thoughts here is that in the near term, the stock may move higher and retrace back to the trendline support that it had broken through, and it can “ride” along this resistance line for a bit, up to ~$430, but unless it can gain enough buyer momentum and make a move to break above the trendline AND moving average resistance, it will most likely follow a bearish turn lower in the longer term. Investors and traders need to be wary of the fact that Chipotle’s recent moves is a trend change, and be defensive toward the downside, and not mistaken a retracement to previous support levels as some sort of a rally in the stock. There’s always a chance that the stock will be compelled to move higher on some sort of event driven rally, but barring that, I would caution that buyers need to take a defensive stance on this stock going forward.
CMG (Chipotle) Buying Opportunity78.6 Fibonacci level
area of previous consolidation (buying)
Sell of shares at gap fill for easy 7-10% gain
Chipotle Mexican Grill Gets Support… For Now. Chipotle Mexican Grill ($CMG) Daily: So I’m a big fan of simple, easy to find technical patterns – sometimes they’re not as obvious and you have really try to see what may be developing. But that runs the risk of seeing something that’s not really there, and then reaching for something that may or may not happen. Technicals can’t explain everything, nor do i find them to exist at all times of the life cycle of a stock – at least not in a invest-able, trade-able way. Any kind of analysis is about finding a higher percentage of certainty of something happening, and never a sure thing that you can take it to the bank on.
And one of these patterns is the Head and Shoulders pattern with a declining RSI on each peak, that rounds over (or rolls over) and breaks support. When we see Chipotle on the daily chart here, we see kind of a messy H&S pattern (not all patterns are textbook pretty), better visible on the hourly scale, if you want to further examine it. We see that this stock had a pretty good run up since Nov of 2016, and in March of this year, really pushed higher to around the $500 mark. We see that after it became overbought on the RSI and the MACD started to roll over, the proceeding technical levels continued to decline, while price held up or went higher still – this is a Bearish Divergence. And as this continued to do so and the last peak made a lower high, and broke through the neckline support as well as the 50 day moving average support, well, as they say in the David Attenborough nature shows, “Sadly, there can only be one outcome, now…”
Let’s note the level where it ended the day today after a 7.26% decline – it got support from the trendline support line beginning from Nov 2016, where this upside move began, and stopped and closed pretty much right where that line meets price. RSI is in oversold territory and MACD can go a bit farther – keep in mind that RSI can kinda move sideways here along the bottom (or even go deeper), as price continues to drop. If $CMG breaks below this support, we would have to assume that it’s gonna go down to $394, as i do not see any other meaningful support between current levels and that price point. As always keep eyes on the RSI and MACD to show you what it may be doing before it shows up on price of the stock.
CMG Should hold 423 the trendline and also 200 ma else will be back under 300 very soon. tomorrow might be a deadcat
CMGWill start looking around 418-422. Sold my calls yesterday at 456.5 so luckily didn't suffer my 448.5 stop loss. Painful to watch this.
