Chipotle is trading at new all-time highs after beating earnings estimates. Some of the numbers that stand out:
10% same store growth vs 8.4% estimates
99% increase in digital sales, which now account for 18% of all sales.
39% earnings growth
13% revenue growth
20.9% operating margin
150 new restaurant openings are expected
Authorized $100 share buyback
Labor cost fell 130bps to 25.7% of sales
6.2% of CMG’s float is short which represent about 3.5 days to cover. There is a potential for a short squeeze tomorrow. CMG traded between 763 and 770 in the afterhours session. If we see a breakout above 770 near the open tomorrow, there might be a run to $800. The previous all-time highs near 760 should act as potential support.
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Last week, we saw quite a few strong breakouts in tech momentum stocks, offering great swing trading opportunities – most faded on Friday. The major equity indexes are still in an uptrend, but with the SPY closing below its 10-day EMA, small-caps heavily underperforming, and plenty of momentum stocks having distribution days, it makes sense to be a bit cautious with new long positions.
The latest earnings season has just begun. It is too early to tell but the market reactions so far haven’t been too flattering:
The recent cybersecurity IPO, CRWD cleared new all-time highs
NFLX was crushed after missing its own estimates for subscribers’ growth (the thinking here is if they are losing growth now, when Disney’s service is not even out, then maybe the market is too saturated). It closed below 320, so a test of 300 is very likely.
Financials remained mostly unchanged despite beating estimates.
We pay special attention to market reactions to earnings report because it is the ultimate indicator of current sentiment and sentiment is what drives prices in a short-term perspective (a few weeks to a few months). The real action will start in the next couple of weeks with the big tech companies starting to report.
P.S. Check out my last two trading books. Both are super practical, packed with actionable information that can be put to use right away:
After spending most of 2019 trading between 340 and 380, Netflix is trading under 320 after their latest earnings report. The area near 320 has major pivotal importance and I suspect there will be a war around that level tomorrow morning. The bulls will try to hold it and potentially push the stock towards NFLX’s 200-day moving average which is around 340. $340 is now very likely to act as resistance and it would be a good spot to initiate a short for a quick trade.
If $317-318 is lost, the next major area of potential support is 300.
P.S. Check out my last two trading books. Both are super practical, packed with actionable information that can be put to use right away:
