Looking for a two day trade? Chipotle Mexican Grill ($CMG) just might be what you’re looking for. (October 18, 2019)
CMG
I want to look at Chipotle ( NYSE: CMG ) today. Now, here’s why; the company reports earnings on the 22nd, that’s Tuesday, after the bell, so that’s two more trading for this stock to move. I know it’s very risky to hold a stock over earnings unless you have a really solid profit in it, in which case now you are in kind of profit protection mode and you can do various things like cutting down your position, or using options against it, or something to protect your profit. If you don’t have any profit then you are really risking a lot by buying a stock prior to earnings because nobody really knows what earnings are going to be. So this is not a stock that I would suggest holding over earnings.
However, if you are a swing trader, a quick trader, this is what I would suggest: I would say on Monday, if the stock runs up, I guess we will say above 850.00, if the stock runs up above 850.00, look, everybody knows they report on Tuesday. The only reason this stock would run up above 850.00 is if buyers were taking the stock in anticipation of earnings. In the same way, as if it starts selling off we know that people are selling the stock in anticipation of earnings.
So keep in mind, what you are trading, like, let’s say the stock does start moving higher and you buy the stock, you are not trading the earnings, you are not saying, “Oh I am going to hold the stock over earnings, look how it’s moving.” No, you don’t want to do that. You are trading the anticipation you are trading the traders. You are saying, “Okay, if people are buying the stock, and I am not saying that they will, but I am saying that if the stock is up above 850.00 they are, they will be.
So if the stock is up above 850.00 on Monday you are taking this for a 2-day ride. And the idea is that prior to the end of the day on Tuesday you are selling the stock for a really nice profit. Then you would have your stop, give it about 4, 4.5 percent, about 4 percent is all you would need, a stop on the downside and this could turn out to be a nice 48-hour trade for you.
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