darcy_kincaid

CMG - Long Term perspective for investors and traders

BATS:CMG   Chipotle Mexican Grill, Inc
CMG received it's first kick in the pants for a long time recently when earnings failed to meet expectations.High-flying aggressively bought parabolic stocks are always a hair away from a quick "correction", and this is just a recent example as a reminder.

Fundamentally the earnings report was still strong in our opinion, though it is difficult to believe that growth can continue at the recent pace due to a continued rise in food prices. The question is will CMG be able to pass those increases along to customers without a slowing of same store traffic?

From a technical standpoint we see nothing more dramatic than a normal retrace or pullback after a significant price target is reached. It is normally a healthy event in which profit taking is accompanied by a temporary sell-off back down to the next support area . This is exactly what has occurred. The question is, can the gap be negotiated or will it prove to be insurmountable at this time?

As is normal, once the 1st target was reached on the short side there has been some profit taking. Coupled with that is the re-entry of longs at the same level and this has created an updraft that has propelled price to the first short area.

The chart shows the working short as well as the working long setups on the LT time-frame. Usually our LT setups are shown on a Weekly chart but the Weekly doesn't show the recent gap down.

We have identified the first two aggressive short ranges and their respective 1st targets as well as the first target for the Intermediate Long.

Trade the chart and trade safe.
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