Tuesday, November 8, 2016

Chipotle With The Hammer(s)!

Chipotle  [CMG]

     I am in love with Chipotle right now. Talking about the stock, not the food. I love it, but am a cheap-o when it comes to buying fast, or fast-ish, food. I wrote about it earlier but I just can't get over how SOLID the chart is looking for the next 1, 2, maybe even 3 weeks. It's hard to say and obviously I want to point out that this isn't a sure fire thing. I can't tell the future. The markets are unpredictable and people act irrationally sometimes so in reality, ANYTHING can happen.

     BUT, something to note and keep in mind regarding stock, bonds, even the economy. Business men act like a pack of animals. Meaning they can be be frightened and all act as one. A great connection here is talking about bank runs. Example being if one guy goes and takes all his money out the bank and another person see's, he gets scared and thinks well if he did it then I should do it. Then someone sees him and it just keeps going and creates a panic and a bank run (sometimes a bank panic, which is a system wide bank run) throwing a huge ass wrench into the economy. I'm not sure if I explained that well or not but if you have questions or disagree, comment below and I'll try and chime in!

     Like I was saying, anything can happen and nothing is a perfect predictor of anything but this is
something I have been taking note of in all the charts I have been watching. It seems like almost EVERY time this little bugger is created the trend reverses. I mentioned it briefly last time and I am starting to like it more and more; the hammer and the hanging man. On October 17th, it's evident that there is a hammer formed and a rebound up. A reversal, if you will. A few days later there is a handing man. It's the black candle. When the candle stick pattern happens in the trough it is referred to as a hammer. When it's at a peak it's referred to as a hanging man. The one I am most excited about is the most recent one that happened on November 1st. It's a very strong looking hammer and some very positive moves over the next week. Another thing to note is the 50 day moving average [blue line]. Before, the stock price was pretty close to it and when it hit it and crossed over it seemed to use it as a ceiling, or resistance, and fell back down. That paired with the poor earnings call lead to the large drop at the end of the month. Now, there is 6.64%
upside from the point we are at now until the moving average line. All of this is referencing the daily chart. The short term. Whats even more impressive is the weekly chart and the long term potential for this stock. Here we can see that the week after the massive drop it formed another very strong hammer and have already seen a little bit of growth from the Monday Hillary jump. To compare to my last analysis and the 50 day moving average there is much more upside potential. This chart, if we are assuming that the 50MA will be used as a resistance, shows 15.83% growth potential over the next month or two. In the past, the 50 day has not been used as support or resistance. That's not to say it can't in the future. Just saying the pattern isn't conclusive. The weekly compared to the daily stochastic looks pretty similar. The daily is already showing bullish trends and is on the trend upward. The weekly is less proving as the black line has yet to cross, or even come near, the read line. It looks like it has started to flatten out and by the end of the week may start to see them inch closer, but right now this is where it stands.



Chipotle has definitley been on my radar for the past week and has just nuzzled it's way up my list. This is something I already bought in my mock portfolio (fake money) and have seen a pretty solid return. I really like if for the weeks to come. One thing to note is that on the finviz chart through the link at the top it is in a channel downward. It pretty much has been using that line as a resistance and right now would be about $430. Something to watch for as the stock rises.

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