It’s been a while since we looked at a ‘lunatic’ stock, but I’ve selected Chipotle for the insight it can give us into the mindset and intentions of institutional traders right now. Chipotle is one of their favorites, since the task of manipulating it higher enjoys almost universal support from big players. It helps that the ever-upward trajectory of the company’s earnings is relatively predictable and mostly free from nasty surprises.
From a technical standpoint, the stock’s slight penetration of p2=722.73 has signaled more upside over the near term to at least D=731.61. Mechanical trades on a pullback to p2 are encouraged if you thoroughly understand the tactic. The stock’s interaction with D could yield clues about how much underlying strength remains at that point. For instance, a decisive penetration of D within an hour or so of when it is first touched would indicate another, potentially significant, leg up. ‘Decisive’ in the current context means by at least 35-40 cents, or a close above D. Naturally, if an institutional favorite like Chipotle is moving higher, it implies the broad averages would be rising too, or at least held buoyant. ______ UPDATE (September 10, 12:37 a.m. EDT): The stock moved strongly higher as expected, most recently to a bull-trap peak at 736.00 on yesterday’s opening bar. Since there were no reports in the chat room of subscribers catching a ride, I did not establish a tracking position. However, yesterday’s reversal looks like a prelude to a drop to at least 703.23. a Hidden Pivot midpoint that you could bottom-fish with a stop-loss as tight as 0.16. _______ UPDATE (September 15, 10:20 p.m.): The creeping rally of the last week has generated a ‘mechanical’ buy signal at 723.25, stop 710.50, for a possible ride to 761.49. _______ UPDATE (September 28, 11:28 pm.): The stock has gotten pasted after having risen no higher than 741.89. Look now for a bounce from exactly 705.25, but if none comes, CMG would be signaling more downside over the near term to 686.94; or worst case, 668.62. If DaBoyz can’t keep this favorite from slipping, the stock market is in more trouble than many might imagine,