Here’s your trade on Chipotle Mexican Grill (CMG) (February 28, 2013)
GRPN PCLN CMG
Dan Fitzpatrick here on February 28th. February’s done, now we’re looking at March. I’m starting with Groupon ( $GRPN Groupon Inc ). I’m laughing at myself, which I do a lot, because there’s a lot of grist for the mill on that thing. I featured Groupon ( $GRPN Groupon Inc ) yesterday, after the close. I didn’t know that they’d already announced earnings and that ultimately their CEO would get fired. My sense was, Hey! You know, I think these guys are moving higher, seriously? My bad. I didn’t even know they were announcing earnings. So that was sloppy research on my part, because there basically wasn’t any research and so I’ve got to apologize for even walking you through this. Happily, unless you were you were in a cave or something, you probably didn’t buy this morning because of what happened. My sense was, again, I think this stock is headed higher; instead it fell and headed lower. One of our members, and by the way, whoever you are, I forget, I’ve been reading so many forum posts today, told me not to feel so bad about myself because it gave him a good 59-minute trade. What a 59-minute trade, is, by the way, is literally a trade for the first 59-minutes of the market. What happened here with Groupon ( $GRPN Groupon Inc ) was the thing gapped down, fell down and the low of the day was one penny below where the stock actually opened. So this was actually a nice trade to the long side for those of you who are nimble day traders. However, make no mistake about it, I’m not taking credit for that, because again, I did some really crappy research and didn’t even know that they were announcing earnings; so my bad. Actually, this is the second time that I’ve done that recently, I hate to admit it, but you know I am, if nothing else, honest. Another one that I did this last week was Priceline ( $PCLN Priceline.com Inc ). Same thing, I did not look at earnings, by the way, please don’t do that. I opened up a bull put spread on Priceline ( $PCLN Priceline.com Inc ) less than five minutes before the market closed on the day that they announced earnings after the bell. It was a bull put spread and the reason for my opening it was, Hey! This is bouncing off the 50-day moving average; I got a sense of where it’s going to close. March options are going to expire in 16 days, a couple more days earlier. So I took this purely as a technical trade, and then after the market closed, an hour or so passes and I’m going through my stuff to get ready for my Strategy Session, I look and I see Priceline ( $PCLN Priceline.com Inc ) trading up here, northwards of $700.00 or $705.00 and I’m going, what the heck just happened? So then I kind of had a sense of what was going on, because stocks don’t move like this for no reason, and then I realized earnings were released, they were really good, the stock went up. So this is, in my view, like blood money, I don’t deserve this money, but I’m going to take it. It was a stupid trade that I made but I’ll take the money. What I also did though, was, so you know, is started, I believe I mentioned this on OptionMarketMentor.com, opened up a bear call spread, because the stock gapped up so much and it didn’t keep going. So now, basically, I’ve got this thing sandwiched, as long as the stock closes basically above this level and below this level two weeks from tomorrow then I’m making a lot of money but half of it is just stupid money, it’s dumb money; So don’t make that excuse. Don’t make that mistake; now, with that said look at Chipotle ( $CMG Chipotle Mexican Grill, Inc ). It was basically flat on the day and before I turned on the record button here I actually did check earnings. Who woulda thunk it? They announced earnings on February 8th or it was February 5th. So we don’t have to worry about that. What I’m looking at here is a stock that continues in a pretty nice uptrend here, had the big dumpage there, but it’s in a really nice uptrend, volatility squeezing a bit. So I would look for more upside from here. I’m not saying that it’s going to happen tomorrow, but just watch this stock. If it pulls back a little bit closer to the 50-day moving average, that would be the ideal time to own it, that would be the ideal time to take an entry; but just zoom out and you can see what’s happening with this stock. It is gradually trending higher, it’s kind of pulled back to support, drifting up again. I think, on a strong market day, you’re probably going to see this stock move nicely; it’s going to push above the 200-day moving average. But here’s the deal, even if it doesn’t do that, respect the trend, respect the uptrend, the uptrend is intact, so just go with it. Okay members; get over to the Strategy Session. Again guys, sorry for Groupon ( $GRPN Groupon Inc ), total my bad, but I think Chipotle ( $CMG Chipotle Mexican Grill, Inc ) is going to work a little bit better. Free Chart