CMG has started to fill the gap. Which way now? (September 22, 2012)
CMG
I’m Dan Fitzpatrick at StockMarketMentor.com and now OptionMarketMentor.com too. It’s Saturday, September 22. I want to look at Chipotle ( $CMG Chipotle Mexican Grill, Inc ) in this video and here’s why. You can see this thing; it fell like a ton of bricks, a wet ton of bricks, on really, really heavy volume, the thing really, really got slammed hard. Volatility squeeze to the upside, that’s great, now its run its course. And the stock, is it consolidating or is it getting ready to fall further? Before I even answer that question I always like to go to the weekly chart so I can see what’s happening here. This gives me a clearer picture of what’s going on. Certainly a really, really nice uptrend, but this is a major break, obviously you can see that on the chart. If you bought at the top, you are not happy, 130 points later, more than that. The point is, this is a big change, this has gone absolutely from a buy the dips stock to now sell the peaks or sell the rallies stock; you’re going to see a lot of short covering in fact I suspect that some of that is what this has been after the volatility squeeze. But where is this right now? I believe that this can go clear down to 300 again before you’re going to attract more buyers. Again I look at the weekly chart, as a big reference point for where is this stock is really going? I want to be short this stock or I at least don’t want to be long this stock. Now I look at the daily chart, the weekly is my decision timeframe, the daily, that’s my action timeframe. I would short this thing right now or perhaps buy puts on it or do some other type of an option trade, but volume is not really heavy on these contracts and so it’s really problematic to trade options when they’re pretty thin, it means the spreads are wider, like 40 cents on some of them and that’s too wide of a spread to pay when to options are so ill-liquid. So what I would suggest doing is if you want to short the stock then short the stock, if it rallies up a bit, certainly if it rallies up to a new high, the short term high was 351.80, if it rallies up above that level then you certainly want to cover your shorts. On a percentage basis it isn’t that big of a deal so you’re not risking a whole bunch of money. But bottom line is I think this hasn’t hit bottom yet, I think it’s going to continue to go lower so you may want to check that out. Okay members, I’ve got a pretty extensive Weekend Update for you including a Sector Spotlight on some of the telecom stocks and a boatload of other stocks in our Stock Watch video so get over there. New members to SMM, Stock Market Mentor, welcome, I’m so glad to have you and also those of you that are Option Market Mentor members, which we just opened this last week, we’re really getting a lot of response for that. We’re going to keep this special going of $7.77 for the first month, which is fully refundable if you don’t like it; we’re going to keep that going for a few more weeks, but after that we’re going to get real with our pricing because we’re got a more established product, but right now we’re still in the open house phase so if you haven’t tried that out it’s not going to cost you a dime, you’re going to basically loan us $7.77 which you can call back anytime you want over the next 30 days. So I want you to get over to OptionMarketMentor.com and check that out. Free Chart