October 2, 2016

Stock Alert and Chart Analysis: CMG


  In these stock alert and chart analysis posts, I want to point out a security that has a very interesting chart and/or serious buzz in the social media sphere or mainstream media.

  To help understand these alerts and chart analyses, consider checking out how I perform technical analysis here and how I trade breakouts here.

  Okay, back to the good stuff!

Stock: CMG, Chipotle Mexican Grill, Inc.

Long-term Weekly Chart Technical Analysis:

CMG had a massive sell-off since October 2015, approximately a 50% drop in value. Currently, CMG is consolidating around 400 and is creating a descending triangle pattern. Moreover, CMG tried selling off below 385 twice but failed both times because buyers came in aggressively. In fact, billionaire Bill Ackman’s hedge fund Pershing Square Capital Management disclosed a 9.9% stake in CMG last month. In addition, Finviz shows a short interest of a whopping 18.97% of the float.

Long-term Weekly Chart Gameplan:

CMG is in a bear trend so odds favor the shorts. However, a BO above the down-trendline could propel the stock to at least the 465 area from new buyers and shorts getting squeezed. Otherwise, longs would be better off waiting for another retest of 385, another failure, and a reversal candle for the entry. That would ensure longs buy near support instead of near resistance--which is where CMG is right now--as well as provide better risk-reward.

What do you think CMG is going to do in the near-term?