Manage your risk on this short position. (September 01, 2012)
CMG
I’m Dan Fitzpatrick at StockMarketMentor.com on Saturday, September 1st. I want to continue where we left off with Chipotle ( $CMG Chipotle Mexican Grill, Inc ) last week; just to reiterate I’m thinking this is looking like a fairly good short. I would rather short it up here as it breaks the 200 day moving average or maybe a test or something like that, but you know you’ve got to take what you can get. The reason that I think it could still be a good short is because after such a big massive pullback the rebound was pretty stinkin’ anemic; also what’s happening with the drought? Well, corns going to be a little more expensive this year and a lot of folks like corn tortillas. Similarly now meat, I’ve mentioned this before, a lot of farmers are selling their beef, they’re slaughtering their cattle earlier, by the way I can’t eat meat anymore, I saw some pretty nasty stuff on CNN Headline News and I can’t do it; but some people can, a lot of people can so they are selling a lot more of their cattle which should probably drive down meat prices which helps Chipotle ( $CMG Chipotle Mexican Grill, Inc ). But what happens next year when there are no cattle? Well now meat prices are going to be higher, so this companies getting kind of like a double whammy; also just look at it technically, on Friday it was down half a percent when the market was up, so money’s not coming in here. What I would suggest doing is just watching this line, watching this line, look where it’s trading along the Bollinger Band, look where it’s trading along the lower Bollinger Band; as long as it keeps doing that you’ll see the Bollinger Band kind of widen out, this stock has a ways to go. If it starts instead traversing Bollinger Bands then just cover your short, you can always re-short, but don’t just hold a short because you want to make money. Right now, if this were to reverse what do we have? A higher low relative to this, we don’t see that yet, instead we’re desperately seeking a bottom, which is better than desperately seeking Susan in many, many ways. So far this trade would be working to the short side, but if this starts to traverse the upper Bollinger Bands this higher low could be something that’s going to hurt you. If you stay short, because after all, the big meat of the move, pardon the pun, has already occurred and now we’re just kind of trying to get the scraps. Okay members, the weekend update has some tutorials in there and some other things that are a little bit different than what we usually do; so please watch them, please. Free Chart