Reversing Momentum!

Chipotle Mexican Grill (CMG) was everyone favorite momentum stock until December. But apparently end of the year party booking was light at CMG and the stock has been coming down to more reasonable valuation over the last month or so (P/E is around 42 and forward P/E is now 32). And today was another down day going against the tape. Here is the latest chart:

The long term trend is still up while the medium term trend is tethering on the brink of bearish. The 15 day ROC (Rate of Change) has been negative since early December and points to the turning point. It is likely that we will consolidate around here. Taking into account the big run since the last earning announcement, we have retraced about 50%.

There should be support between $210 and $220.


The fundamentals are much better now as I mentioned above:

And projected earning growth for the next 5 years is about 20% a year.  A forward P/E of 32 is a bit rich, but not unreasonable in this market. I would not touch this stock in this market though! This has been a short killer...


As usual, for what it's worth, MSN Scouter has a 10 (Strong Buy) rating and Zacks has a 2 (Buy) rating. Analysts ratings are as follows: