Post-Earnings Stock Charts: Chipotle Mexican Grill (CMG)
Click to Enlarge Investors didn’t like the news that Chipotle Mexican Grill (CMG) will raise its menu prices for the first time in three years, but the upper-tier fast food chain defended the decision with reports that it saw quarterly sales climb 13.4%. CMG’s management gave the market an increased sales outlook even with the plan to increase prices.
While Chipotle’s forward guidance looks tasty, CMG’s stock charts aren’t quite as appetizing for the short- and intermediate term.
On the April 17 close, CMG’s short-term chart flashed two near-term bearish patterns: a bearish key reversal bar and a bearish outside bar. Both patterns develop after a strong rally and tell traders that the recent run-up is signaling exhaustion and lower prices may be ahead for the short term.
More significantly, at the April 17 close, Profit Scanner powered by Recognia identified a bearish head-and-shoulders top pattern had emerged on CMG’s chart.
CMG’s head-and-shoulders top is expected to resolve in approximately 45 trading days, with a downside target of $448 to $432 — levels that are 13% to 17% lower than CMG’s current price.