Two strong stocks on Friday — Google (GOOG) and Chipotle Mexican Grill ( CMG). Here’s how to tr..
Discussed in this article: Chipotle Mexican Grill ( $CMG )
I want you to look at Chipotle ( NYSE:CMG ) here. The market really screamed yesterday, like big time. Google ( NASDAQ:GOOG ) kind of got all the attention, but actually Chipotle ( NYSE:CMG ) moved more on a percentage basis. But they both look pretty much the same with respect to the daily as well as an intraday chart, which I’m going to show you here.
First Chipotle ( NYSE:CMG ), nice uptrend, this is a stock that I’ve actually been bullish on for a while, but the big thing for me was last quarter when the company announced earnings they said that their same-store sales were increasing and the cost of their product was decreasing and then recently they’ve said that they’re actually going to jack up their prices 5 or 10 percent and I don’t think it really matters. So this is a company that’s really continuing to do well now.
You say, “Well is all of this good stuff now factored into the stock?” Maybe, but first I want to look at Google ( NASDAQ:GOOG ) and show you we’ve got the same type of thing with one key difference. Google ( NASDAQ:GOOG ) has actually been trading sideways for probably over six months or so. So this has been trading sideways, I think this has further room to go here. What I would expect is that this is the top of your gap right here, 974.00. A thousand is a key level, so, in my view as long as Google ( NASDAQ:GOOG ) stays above this level, just anywhere in here above 970.00, as long as it stays above 970.00 I think this is fine.
I’m sure there’s going to be a whole bunch of articles over the weekend that are probably bearish on Google ( NASDAQ:GOOG ), is this thing really worth $1000.00? Wasn’t that a little too much? It was up 13.8 percent, we’ve seen a lot of stocks go up 13.8 percent. I will tell you I’m not a Googleonian, I don’t even own it, I did trade some calls on it on Friday, but I don’t own it because of this, it just hasn’t been trending and if you had taken away today’s price action it just wasn’t really a stock that I was interested in because it’s not trending.
Now I would be interested in it if the stock had a pull back to test this gap. I would expect it at some point to test $1000.00. And you think about it, just move the decimal point over a place or two, the stocks at a $100.00, it’s 101.00 right now. Do you think maybe it could move down to $100.00 and even $99.00, $98.00? So this could have a pretty decent retracement on a point wise basis, but on a percentage wise basis probably not so much. So I’m looking at this 970.00 as support for this stock. Now let’s get back to Chipotle ( NYSE:CMG ). I can say the same thing, this has already been in an uptrend so you’d think, “We’ll hey, you know the stock gaps up this high there’s probably going to be some profit-taking, because again the stock had been moving up in anticipation of earnings. Not so with Google ( NASDAQ:GOOG ) that was a total surprise.
But here’s how you can trade both of these stocks. They both pretty much look the same when you go down intraday. If we go to a 5-minute chart here on Chipotle ( NYSE:CMG ) you’ll see this is thing of beauty trickling right up along the 20-period moving average, and again I’m using a 5-minute bar chart. So as long as this stock is trading along this moving average treat this is your daily chart, just about. Because the stock is so far extended that from a point wise basis, in other words let’s say you’re trading call options on this; this could pull back quite a bit and hurt you.
If you’re looking at an intraday chart you can stay long this stock, look you’ve got about three points between support and where this stock is right now. If you go out to a daily chart where’s your support, 480.00, 445.00? That’s what I was talking about with Google ( NASDAQ:GOOG ), it’s really difficult to find support on that other than clear down at 970.00. So here, as long as you’re using the middle Bollinger Band, the 20-period moving average on a 5-minute chart, I think you’re good to go.
Also keep something in mind too, this stock kind of popped out of a volatility squeeze towards the end of the day so there was buying on this all the way through and then this was I’m sure just basically like a cleanup order where institutions are buying this stock all during the day and then towards the end of the day they basically said, “Screw it, finish my order, just get me all the stock that I want.” And that’s what happened.
If we look at Google ( NASDAQ:GOOG ), and by the way that’s pretty bullish for a stock, if we look at Google ( NASDAQ:GOOG ) its got a sloppier pattern, definitely a sloppier pattern, this is tougher to trade than Chipotle ( NYSE:CMG ), that’s going to be a better trade for you. You look at Google ( NASDAQ:GOOG ) and we can start drawing trend lines this way, but I mean how the heck do you do that?
A lot of different ways and none of them is the right way. The thing that you’ve got to know about Google ( NASDAQ:GOOG ) is, it gapped up and within less than an hour the stock was essentially done for the day. Now I know it drifted higher after this but we had a big flurry of buying, stock drifted higher all day and then it was not able to get to a new high at the end of the day. So this is, in my view, indicative of maybe just a little bit of weakness in Google ( NASDAQ:GOOG ).
Between the two, Google ( NASDAQ:GOOG ) and Chipotle ( NYSE:CMG ), I’ll be trading Chipotle ( NYSE:CMG ) on Monday, you can be sure of that, more than Google ( NASDAQ:GOOG ). Both of them look good, be nice if you had owned them on Thursday, still good to be long them, but as far as going forward, looking at a tradable stock intraday, I think Chipotle ( NYSE:CMG ) is your trade.