Turning his focus to restaurants during Thursday's "Mad Money" program, Jim Cramer checked in with Brian Niccol, CEO of Chipotle Mexican Grill Inc. (CMG) , which is celebrating National Burrito Day.
Niccol said Chipotle is still open for take-out and delivery and is celebrating Burrito Day in any way it can, like its new program called Burritos for Healthcare Heroes, which is helping to feed America's healthcare workers battling Covid-19.
When asked how Chipotle is able to manage take-out and delivery, Niccol said it has invested heavily in its digital platform. Coupled with a second in-store food prep line, the online side of the business is more profitable than in-person ordering at its restaurants.
Let's get some charts to go.
In this daily Japanese candlestick chart of CMG, below, we can see that prices skidded down about $500 a share in the first-quarter market meltdown. Prices rebounded toward the pivotal low of November but stopped short of that key chart point. I consider it a sign of weakness when a stock stops short of a potential target because sellers stepped in sooner than anticipated. The trading volume was heavy into the actual low but it has been shrinking on the bounce, which is not a good sign. The candles show a bullish engulfing pattern at the bottom and that was a positive. The moving averages are a negative with the bearish death cross of the 50-day moving average and the 200-day moving average.
The daily On-Balance-Volume (OBV) line declined with the price action since February but only shows a slight recovery from the middle of March. I guess a $500 price reduction was not enough for the buyers to become aggressive. The Moving Average Convergence Divergence (MACD) oscillator has crossed to the upside for a cover shorts buy signal, but an outright go long signal is probably going to take a while.
In this weekly Japanese candlestick chart of CMG, below, we can see some mixed signals. While there is a big doji marking the low in March we can see upper shadows above $650 the past two weeks, telling us the upside is being rejected. The slope of the 40-week moving average line is now negative. The MACD oscillator is bearish and the OBV line has been declining the past three months.
In this daily Point and Figure chart of CMG, below, we can see that the software is projecting a possible downside price target in the $530-$525 area. On the topside a trade back up to $705.63 should turn the chart more positive.
Bottom line strategy: If CMG can rally above $705 I will favor a move higher, but at this point in time it looks like prices can dip back to the $530 area.