Market Overview

How High Can Chipotle Go?

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In a recent video, JC Parets, Market Technician and Founder of Eagle Bay Capital, analyzed Chipotle Mexican Grill, Inc. (NYSE: CMG) and a couple of related charts following the company’s earnings report.

Parets discussed why $715 was “a key target at the beginning of the year, and really throughout the fourth quarter.” The last major correction the stock saw took place early last year, between March and April, he explained. Prices went from above $600 to under $500 very quickly at the time.

Once the stock surpassed that level, his target was set at $715 based on the 161.8 percent extension of the correction.

The target was achieved earlier in 2015 and since then, the stock has corrected nicely, Parets added.

Parets continued, “We’ve got a very clean downtrend line [in blue] from those highs in February, and we recently broke out of that over the last week, especially with earnings last night, and we’re back to that $715, $716 levels (…) So, this is critical, critical resistance.”

In his view, this is a failed breakout -- his next price point to watch is $700.

His conclusion? "Risk management-wise, [there's] no reason to be long if prices are below 700 and aggressive longs can add only if we have cleared this resistance from earlier in the year."

Posted-In: Eagle Bay Capital JC ParetsAnalyst Color Technicals Movers Trading Ideas


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