timwest

CMG Uptrend Broken

BATS:CMG   CHIPOTLE MEXICAN GRILL
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CMG has broken below a key level of technical support at 421 where it had spend more than two weeks building a base. The support level broke on heavy volume and this selling zone has been retested on a light volume advance and is close to failing as of this analysis (failure is defined if CMG breaks under a previous day's low). You can see how low CMG would have to go to see another level where it had traded for 13 days. Target 400. Stop loss: 425.

This is a technical-only analysis, but CMG's market cap is a large $13 billion and their earnings are a small $230 million (rounding off). With sales only $2.4 billion, CMG is a whopping 5.8 times trailing revenues. Would you buy the whole company with $13 billion of your cash laying around so you can "earn" less than 2% on your money in a restaurant business? Obviously they have leverage to grow the company and have done so very successfully to date.

Cheers. By: Technical Tim, 3:00PM EST Monday, April 30, 2012
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Comments

Agreed.
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Followed.
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Agreed.
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CMG is about to make its first downside target...
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Tim, could you please provide your opinion/post an update on CMG at this moment? Do you agree with long term shorting opportunities published by nmike ?

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Followed.
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Followed.
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Agreed.
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The path veered a bit by not dropping to 400 first, but did go up to the area that I thought it needed to rally to. Also, CMG didn't hit the stop and is now nicely profitable. Hope you all are doing well too.
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Thank you Tim
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