Are you bullish? Here’s the beef on Chipotle ($CMG) (September 24, 2020)
CMG SP-500 CMG NVDA CMG SP-500
I want to take a quick look at Chipotle ( NYSE: CMG ) here. The market is still heavy; we’ll just look real quick at the S&P ( INDEXSP: .INX ), it’s still printing lower highs and lower lows. Look at the 8-day exponential moving average, it’s resistance. It is now the ceiling as opposed to the floor, the way it was on the way up. So there is still a market under distribution here but not all stocks go down when the market does. Chipotle ( NYSE: CMG ) is one that is at least holding. I would kind of put it in the same camp as NVIDIA ( VIE: NVDA ).
NVIDIA ( VIE: NVDA ) is a little further along where you see it’s holding here at 480.00. I would say if the stock falls below, we’ll call it 466.00, then I definitely wouldn’t want to be long this stock. So that is about 7 percent, that’s the room that you are giving this trade so you are getting a twofer here.
Then on Chipotle ( NYSE: CMG ), this was a pretty big decline. It undercut the 50, about 15 percent of a pullback. A lot of times you will see that that is kind where these stock will halt, at about 15 percent. But now it is holding, it’s back above the 50-day moving average. It still has some overhead resistance because of how this traded yesterday. Everybody that bought there is a loser, and so there is going to be some supply that any bulls are going to have to soak up before this stock can really move higher.
That kind of leads me to where your trade could be. If you like Chipotle ( NYSE: CMG ) and you think this is a good opportunity then you snag this thing now and you put your stop just a little bit below today’s intraday low of 1215.52. So you give it a pretty tight stop, frankly, I wish we could put it even lower because we are able to get it right at the 50-day moving average but that’s a woulda, coulda, shoulda trade. So instead we take what we can get and define our risk that way.
That is one way you can trade this; just on a general note though, the market is really hard right now, there is nothing we can do about that. The only thing we can do in reaction to that is, trade smaller, be more reluctant to trade, sometimes trading not at all is the best trade. Remember that cash is position; if you are 100 percent in cash don’t sit there and say, I’m not even trading. Of course you are, of course you are trading. You have a massive position and on down days or when the market is in a downtrend, you are outperforming the S&P ( INDEXSP: .INX ). So just don’t ever forget that, okay?
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