Looking for a squeeze? Try Chipotle ($CMG). (July 12, 2019)
CMG MCD SBUX CMG
I want to look at Chipotle ( NYSE: CMG ) today, here’s why: Not only is it keto friendly, which I like, but the stock is close to breaking out. They report earnings, not this coming Tuesday but a week from Tuesday on the 23rd. This stock is drifting sideways here you can see it.
If we look at McDonald’s ( NYSE: MCD ); McDonald’s ( NYSE: MCD ) is in a pretty nice uptrend here. Starbucks ( NASDAQ: SBUX ) is in a nice uptrend as well. Then we’ve got Chipotle ( NYSE: CMG ) that has just kind of drifting sideways.
I look at this and it just seems to me like this stock is really ready to break out. It has kind of pushed up against 750.00 several days this last week. Here on Monday, Tuesday, Wednesday, Thursday it took a little break and then Friday, today, it has pushed above there again. So we have got four knocks on the door here over the last week and this last low on Friday was higher than the prior low.
Follow me on this because this stuff is important, I will show it to you in a couple of different ways. First of all, we get this zizgag, zig, zag and then it looks to me like we are going that way, right? But then we also have this; we’ve lower intraday highs, lower intraday lows. We’ve got lower opens and we’ve got lower closes on each of these successive days, Tuesday, Wednesday, and Thursday. Then along comes Friday and the stock gaps up and the intraday low was higher than the prior low. The stock closes high and where it closed was, actually the highest that it’s been.
I am not going to dissect this too much but it ran up above Thursday’s entire trading range and just about eclipsed Wednesday’s trading range. But the ultimate high here was almost as high as the thing last Tuesday. My point is this, we have this clear cut change in power, from up, and then weakness, and then back to strength and it is just starting to break above 750.00 so this could be a pretty good trade if the stock cooperates.
My suggested trade is, if the stock is strong on Monday, if it starts moving higher, then set your stop here, maybe you might want to set it down there. But let’s say you wait and you are buying the stock at 753.00, you can keep less than 2 percent stop on this stock. If you are buying into the pattern that I just suggested, where lower intraday lows, lower intraday highs, oh, Friday totally broke the pattern. Then where you can actually set your stop is just a little bit below Friday’s intraday low. You can set a stop right down there, literally 1.5 percent, maybe a little bit looser than that. But the idea is, this is giving us a low-risk entry and kind of a high probability trade just because of the price action that we are seeing.
My bet is if the stock stays above 750.00 on Monday this is a trade that could work. It could get you up at least $20.00, maybe even up to 800.00 over the next several days before earnings, because the stock has been squeezing that long.
Free Chart