Down $86 points in a session. Business model once again was a taco stand. But, all of one quarter later. CMG Hit the skids. What I will give you is that it would have been a hard natural short to sit with unless you sold into strength & positioned correctly. Also, in the options, theta would have been a bitch depending on your expiration....... BUT the trade was there. Who knew 86 points in a session. The same could have been said for FOSL.
You know what? On first glance, PNRA looks weak & should probably be shorted on rallies. But, I can't say. I'm not throughly schooled in the stock's fundamentals. The premise on a short side trade on CMG was that it was a $400 glorified "taco stand". My gut told me that The price seem so overextended for a chain like that. Also, it had the "story stock label". Those trades end sooner or later with downside declines. It kind of just stuck out like a sore thumb to me. It seemed like a high prob event that there had to be what the street calls a "multiple compression" at some point. So, it looks like the death Nell for them was the slowing consumer. That might very well be the case for PNRA. I guess from a short seller's perspective, the question to ask is what makes that company so "amazing" (obvious sarcasm to be directed @ the optimistic longs) Where are the cracks in the facade if you will? Just some idle thoughts.
After a very cursory look at the fundamentals PNRA doesn't look "that" bad. The chart has been mostly up but there was a definite correction last year about this time. While it doesn't seem to be so overly valued I do think the issue of food prices going up but the economy stagnating keeps these restaurants from raising their prices. I do like PNRA...I know my daughter in law has single handedly kept them in business I guess thats why I'm a cautious bear.
http://seekingalpha.com/article/738...-growth-has-come-to-a-standstill?source=yahoo Don't know anything about the writer of this article but I concur with his basic analysis. He sees a target of 250....no clue but as good a guess as any. I did look at options and am interested in a two step trade. sell Aug 295 P @ $5.30 buy Sep 280P @ $5.60 doubt the stock tanks totally in one month...good chance for a short squeez and perhaps an uptick before resumption down. If it closes above 295 in Aug then I'll own the 280 Sept put for .30 plus comish. also I like buying the Sept 270/275 put spread for .80 so if the stock does close lower than 295 in Aug I can roll down to 275 to create a fly... Doing an Aug call credit spread didn't look good on a R/R basis
I was quite wrong back in April and closed that trade for a loss when CMG fell to 379.35 on 06/28/12. But I reopened yesterday with a January 300/295 Bull Put Spread. See support in the 300-275 zone, and figure CMG has fallen enough for now. Betting it will consolidate in the 300-375 area for a while. We'll see.
cacti what was your credit? you certainly could be right on a short term basis. Have to say on a TA basis your chart looks ugly as hell...wouldn't most TA guys say it has "broken" to the downside?
I like & agree with this guy's thesis. I'm sure there will be a rally here & there. Great to use to one's advantage, but the broader economy is pointed in the face or against their business model. Once again the higher prob bet is down, not up for this stock.