Discussion in 'Stocks' started by RichardRimes, Jun 27, 2012.
didn't find any news for the 4%drop
Negative analyst comments. http://finance.yahoo.com/news/chipotle-falls-analyst-suggests-slower-180046569.html
22% haircut on Friday 7/20 due to lower guidance for growth. I believe this is the death touch for the bulls.
This is precisely why I call pre-earnings a gamble. Before the report it was anyone's game, now it is more than clear where it is heading next.
All rallies should be shorted imo so I concur with the Death Touch
High growth stocks are beautiful to ride, until the growth slows down, then they are punished to no end.
In June I was modestly short via an OTM call credit spread. When it droped late June I looked to put on an August put spread. I did a debt 375/370 put spread for a buck before earnings. The idea was if earnings were reasonable to good I would then sell a farther OTM credit spread for something over the buck. And if earnings came in light I'd have a chance to make good cash. After the tank I just obviously cashed in.
Now I'm a bit stymied. I haven't a clue how far this turkey will drop. I could do a credit call spread but hesitate since it could rebound past my strikes. I could do another OTM debt put spread then create a condor but again right now I don't see where it might stabilize. Nothing but air below.
Last pivot high was 7-19 at 404.59 avg range 2.3% $9.26 with a buy point 1 of 380.55 and buy point 2 of 366.15. It was downgraded by multiple brokers from a buy to a hold. But when this stock CMG generates a buy signal this thing is going to make some bucks. The last time I traded this stock was 7-5 at 384.00 out 7-13 at 386.22. I hope this next time is better.
Long term investors don't appreciate "heart attack like" pullbacks.
One thing is for the whole market to correct due to global events and see everything down another thing is to see your position down over 20% overnight, it speaks for it's lack of liquidity among other things.
I think the reputation of CMG is doomed now.
The next NFLX? Time will tell.
I was trying to think of who to compare it to...and decided there are some valid comparisons to Boston Market. A high flyer in the early 90's with better food than most "fast food" chains. Flamed out late 90's filed for BK and currently is privately owned.
They have a fine product and good workforce, but with higher food prices and strong competition can it regain its high flyer status? Seriously doubt it. How quickly it will go down is the bet to be made.
Compared to PNRA .........CMG is still definitely over priced. To get to the same financial's it needs to come down at least another 30% EVen PNRA though could be under pressure. I think all the food companies will have a tough go over this next year.
Debit spreads are tempting but hard with stocks like this. The same was the case with FOSL. Just long a strike is the trade with these. but never does one ever expect a risk/reward payoff like this in one session. Who expects something to trade down 80 points plus in a session. Sometimes you get what you ask for.....but IN SPADES!
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