• Subscribe
  • Log In
  • Home
  • Daily Diary
  • Asset Class
    • U.S. Equity
    • Fixed Income
    • Global Equity
    • Commodities
    • Currencies
  • Sector
    • Basic Materials
    • Consumer Discretionary
    • Consumer Staples
    • Energy
    • Financial Services
    • Healthcare
    • Industrials
    • Real Estate
    • Technology
    • Telecom Services
    • Transportation
    • Utilities
  • Latest
    • Articles
    • Video
    • Columnist Conversations
    • Best Ideas
    • Stock of the Day
  • Street Notes
  • Authors
    • Doug Kass
    • Bruce Kamich
    • Jim Cramer
    • Jim "Rev Shark" DePorre
    • Helene Meisler
    • Jonathan Heller
    • - See All -
  • Options
  • RMPIA
  • Switch Product
    • Action Alerts PLUS
    • Quant Ratings
    • Real Money
    • Real Money Pro
    • Retirement
    • Stocks Under $10
    • TheStreet
    • Top Stocks
    • Trifecta Stocks
  1. Home
  2. / Investing
  3. / Stocks

Chipotle Mexican Grill Could Continue to Surprise

I have consistently underestimated the power of the rally in CMG.
By BRUCE KAMICH
Jun 02, 2020 | 08:43 AM EDT
Stocks quotes in this article: CMG

In his first "Executive Decision" segment of Mad Money Monday evening, Jim Cramer spoke with Brian Niccol, chairman and CEO of Chipotle Mexican Grill Inc. (CMG) , the restaurant chain with shares up 35% over the past three months.

Niccol said Chipotle continues to invest in technology, innovation and its people and all of those efforts have paid off during this pandemic. He expected the bulk of its gains in digital ordering to remain after the dining rooms are reopened.

New innovations like its "Chipotlanes" drive-thru service is just one of the things that keeps the company on the cutting edge.

Niccol said the damage to its restaurants from the demonstrations hurts on many levels but that all employees are safe and the damage will all be fixed.

Let's check out the charts and indicators to see if anything needs to be fixed there.

In the daily bar chart of CMG, below, we can see that prices have more than doubled from the March low. The shares made only a brief and shallow pullback in late March and into April so traders looking for a classic retest of the March low had to "pay up" to go long. Prices are above the rising 50-day moving average line and above the bullish 200-day moving average line. The faster 50-day line is crossing the slower-to-react 200-day line for a bullish golden cross.

The On-Balance-Volume (OBV) line has been rising from the middle of March and has made its own new high to confirm the new price highs of CMG. The trend-following Moving Average Convergence Divergence (MACD) oscillator crossed to the upside in late March for a cover shorts buy signal and in April the indicator crossed the zero line for an outright buy message to traders. Currently the indicator is in a take profits sell mode.

In the weekly bar chart of CMG, below, we can see the price action of the last three years. Prices refreshed the uptrend last month by making new highs. The February-March decline is deep but the long-term picture is now bullish again with higher lows and higher highs leading the charge. The slope of the 40-week moving average line is positive.

The weekly OBV line has not (yet) made a new high for the move up and is a bearish divergence when compared to the price action. The weekly MACD oscillator is clearly bullish with no hints of slowing.

In this daily Point and Figure chart of CMG, below, we used a bigger filter of five (5) boxes for reversals (the typical default is three (3) boxes). Here the chart is indicating a possible longer-term price target in the $1,389 area.

Bottom-line strategy: I have consistently underestimated the power of the rally in CMG. The Point and Figure chart above suggests that prices could trade toward $1,400 and the bar chart tells me that a close below $950 is a good risk point.

Chipotle is a holding in TheStreet's Trifecta Stocks portfolio. Click here to learn more about this portfolio, trading ideas and market commentary product.

Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.

Employees of TheStreet are prohibited from trading individual securities.

TAGS: Investing | Stocks | Technical Analysis | Restaurants | Mad Money | Executive Interview

More from Stocks

Roku Has Corrected and Looks Ready for New Strength

Bruce Kamich
Apr 21, 2021 11:44 AM EDT

We have a strategy for aggressive traders.

Will a Bounce in the Broken Be Used as an Escape Hatch?

James "Rev Shark" DePorre
Apr 21, 2021 11:09 AM EDT

What will really make a difference is if the strength holds, and there is a strong close.

How Do You Play the Netflix Dip? Buy Disney

Stephen Guilfoyle
Apr 21, 2021 11:00 AM EDT

Here's my trading strategy.

Index Chart Trends See a Shift

Guy Ortmann
Apr 21, 2021 10:31 AM EDT

The 'wall of worry' is in need of repair.

DocuSign's Charts Have Strengthened

Bruce Kamich
Apr 21, 2021 10:10 AM EDT

Back to the Drawing Board

Real Money's message boards are strictly for the open exchange of investment ideas among registered users. Any discussions or subjects off that topic or that do not promote this goal will be removed at the discretion of the site's moderators. Abusive, insensitive or threatening comments will not be tolerated and will be deleted. Thank you for your cooperation. If you have questions, please contact us here.

Email

CANCEL
SUBMIT

Email sent

Thank you, your email to has been sent successfully.

DONE

Oops!

We're sorry. There was a problem trying to send your email to .
Please contact customer support to let us know.

DONE

Please Join or Log In to Email Our Authors.

Email Real Money's Wall Street Pros for further analysis and insight

Already a Subscriber? Login

Columnist Conversation

  • 04:17 PM EDT REAL MONEY

    Wednesday on Real Money Pro

    Get-rich quick schemes offer little more than pipe...
  • 11:09 AM EDT GARY BERMAN

    S&P Futures

    FIBOCALL: The S&P futures was off 1.5 %... ...
  • 07:47 AM EDT CHRIS VERSACE

    Positive News for a Cannabis Play

    Good news for this name in the Stocks Under $10 po...
  • See More

COLUMNIST TWEETS

  • A Twitter List by realmoney
About Privacy Terms of Use

© 1996-2021 TheStreet, Inc., 225 Liberty Street, 27th Floor, New York, NY 10281

Need Help? Contact Customer Service

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data & Company fundamental data provided by FactSet. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by FactSet Digital Solutions Group.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

FactSet calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.

Compare Brokers

Please Join or Log In to manage and receive alerts.

Follow Real Money's Wall Street Pros to receive real-time investing alerts

Already a Subscriber? Login