Thinking about going back in to Chipotle (CMG)? Here’s your plan. (May 09, 2016)
CMG
I want to look at Chipotle ( NYSE:CMG ) today. You kind of know the story about this, E.coli and burrito bowls don’t really mix too well. That’s what happened here. The thing that I want to mention here, the reason that brought this to my attention is, this sure looks like a higher low to me. You look at the big volume here, you can see the big downdraft that it had. What’s really important about this is, after this came up off the bottom, fell back down and sellers were out of this stock on the 27th of last month. Huge volume, and since that time the stock has generally traded a little bit higher, but the volume has been lighter than average. I like that because it kind of shows a little bit of indifference. And because the stock bottomed higher than this one, to me that indifference is kind of skewed on the plus, on the bullish side.
So if you look at the weekly chart you can see what’s really happening here. I think this is a ‘w’ that is in the process of being built. And the way you have to manage your risk is this way: It is up about 10 percent above this last high. I don’t like keeping my stops 10 percent below, I prefer, sometimes, 2 or3 percent below where I’m buying. If you’re buying this stock clear down here below this last low, I think you really can just start building a position. Buy a little bit of stock now and as long as the stock stays above this part of the range, about 435.00ish, something like that, then you’re good to go. Be patient with this. I don’t see it being a big mover, this isn’t a stock that I’m looking at saying, “Oh my gosh! Get’em while they’re hot, right now!” They reported earnings already. The next earnings report is due like mid to late July. But over time I think this is a stock that’s going to work for you.
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