3 Stocks I Saw on TV (CMG, YHOO, TSLA) (February 03, 2016)
CMG YHOO TS TEA
Every day we see all kinds of stocks on TV; commentators talking about what they’re doing, what they’ve done, what they’re going to do, and this and that and the other thing. So here’s what I’m doing: I’m going to give you the REST of the story. I’m going to give you the stuff that MATTERS on these 3 stocks that I saw on TV. Today we’re going to look at Chipotle ( NYSE:CMG ), Yahoo ( NASDAQ:YHOO ), and Tesla ( NASDAQ:TSLA ).
Chipotle ( NYSE:CMG ) reported earnings after the bell yesterday. The stock was down. It performed, here’s the E. coli symbol here, it’s like almost the perfect cross. The bottom line is this: The stock has been in a downtrend forever. The company reported, I think it was like, 14 or 17 percent decline in sales, but their margins were WAY worse that that. Think about it. The reason is because you’ve got a 14 or 17 percent decline in traffic, you’re not going to have a 14 or 17 percent decline in margins, your costs are fixed. So your revenue goes down, your margins are going to get crushed. The bottom line is this: I think this stock is done going down. This was a big, massive crescendo climax low right here. Today, the stock traded lower, this is like a “dragonfly doji”, where basically what happened is the beast ate it’s own tail.
The stock trades down right away and then ultimately buyers start coming in, chewing through the decline here. At the end of the day the stock basically closed just about near the high of the day. Here’s my suggestion: Ignore the news on this stock from now on. Anything is a speculation, this thing could go to 460.00, we don’t know this. But I’m telling you this, when you’re looking at the weekly chart this is a major decline, a major reversal. The stock is holding well above this low. I think your risk, on this stock, is in NOT owning the stock as opposed to owning it. As always, have some kind of a stop loss in somewhere. I would suggest just maybe 430.00 simply as a function of risk management, that would be about 6 percent. So that’s my deal on Chipotle ( NYSE:CMG ),
Now, Yahoo ( NASDAQ:YHOO ). The company reported earnings and as most people imagined they sucked. Marissa Mayer was on CNBC this morning; I also saw her on Bloomberg. Frankly, if she wasn’t getting paid hundreds of millions of dollars for failing, I’d probably feel sorry for her. But man, she looked tired, she looked beat up. She was blinking more than Nancy Pelosi at the State of the Union address. Just not a good showing at all. Here’s the thing with Yahoo ( NASDAQ:YHOO ): There’s no way I would buy this stock. The only way I would buy this stock is if I was managing somebody’s money who I didn’t like very much, then I’d go ahead and have them pile into it. I’m tempted to short the stock, but here’s the problem: Marissa Mayer, God love her, and what a great cover shot on Vogue, with the stiletto heels. But she’s into buying and selling stuff for a lot of money. Whether it’s Alibaba, remember SpinCo and then Tumblr, etcetera, etcetera. So don’t be surprised, I wouldn’t be surprised if this compay is snapped up by somebody else.
The reason I’m saying that is, because to short this stock just because you don’t like management or something, that was what you wanted to do back here, or maybe even here. Now, I think frankly, this is a stock you just want to stay away from. On a very kind of a long macro basis this is a head and shoulder pattern. Let me show you the pattern here. The bottom line is this: This was the trend, we get a high (what I’m describing is a head and shoulder reversal pattern) we get a high here, a little pullback, a higher high, the trend is good. Now we get a lower low, relative to this one. Now we got a lower high, this is where the head and shoulder pattern is being put in. This is literally right here, right now. So if it wasn’t for the potential for this company to be sold. Or by the way, for them to ditch their CEO and get somebody else who knows what they’re doing and has a vision for the company, if it wasn’t for that I would say this is really kind of a perfect shorting opportunity. Any rally up here would be fine. Any pullback down here, and then a throwback to this neckline here would be fine. You could do that. I would just suggest this: just stay away from, stay away from this stock, because it’s DEFINITELY risky to be short this stock. And it’s also pretty risky to be long.
Tesla ( NASDAQ:TSLA ). Why is this stock down so much? Well, first of all growth stocks are really not in vogue right now. This stock looks like it’s going, I’ll pick a price target, 120.00, that’s my price target, you heard it here first. Why? Because that’s about where the stock bottomed here. That would be like a complete reversal. Analysts are starting to look at this thinking basically that the sales are not really going to translate into the types of earnings estimates that folks have for this company. In other words, expectations are lofty. Now suddenly reality is starting to set in and so that’s why the company’s selling off. Look, the stock has always been expensive. I would rather be short this stock than long it. I absolutely wouldn’t be long this stock. A member at Stock Market Mentor asked me today, “Hey, what do you think about shorting Tesla, buying puts, or this or that?” And my suggestion was, this thing looks like it’s going to zero or at least 120.00. But it is so oversold that you kind of want to wait for some type of a bounce in order to take any action on this stock.
Now, the company reports earnings, I think it’s on February 10th or 11th. You need to check that date. But this is one where, frankly, if it keeps going down into earnings you’d almost think the path of least resistance would be higher. What I’m telling you right now on this, and this is the rest of the story, ultimately, I think this puppy has a 120.00 price tag on it. But between where it is now and where I think it’s going to be, there’s going to be a whole lotta shakin going on. So just get used to the volatility. Wait for any rally before you shorted the stock. And frankly, and this is just a technical setup, the stock is down almost 12 percent in two trading days from this close on Monday. This is almost due for a snapback, for just a short-term snapback rally. So for a trade, watch for an upside move, I will say above today’s close of 173.48, 173.50 we’ll say. I’ll say if the stock starts trading above 174.00, take this thing for a ride north and then ultimately look to sell into it.
3 Stocks I Saw on TV Free Chart