EarningsBeats.com Digest

Published: Wed, 05/13/20

EarningsBeats.com Digest for May 13, 2020

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Dear Digest Subscriber,

Another great "Max Pain" Webinar last night where EarningsBeats.com Chief Market Strategist Tom Bowley identified 23 specific stocks that could make substantial moves between now and options expiration Friday based upon outstanding calls and puts. The video recording is available to all EarningsBeats.com members including those who take out a NO COST trial for 30 days.

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Downside Risks Are Increasing And Even The Best Stocks Are Vulnerable Now

I've grown more cautious in recent Daily Market Reports to EarningsBeats.com members and it stems from (a) apparent distribution taking place, (b) upcoming options expiration, and (c) complacency. There haven't been too many stocks with better short-term and long-term track records than Chipotle Mexican Grill (CMG). The company has been a leader among restaurants ($DJUSRU) for sure. But Tuesday's late afternoon impulsive selling followed a few warning signs and didn't spare CMG. Check out the CMG chart:

A reversing shooting star candle printed after a false breakout occurred with an intraday move above February highs. The daily PPO also is showing a negative divergence as is the accumulation/distribution line, which previously had been quite strong. CMG remains an excellent longer-term investment and is a leader among its restaurant peers, but that doesn't change the increased risks in the near-term. As discussed in our Max Pain webinar on Tuesday, CMG's max pain resides near 845, so that argues for the possibility of near-term weakness as well.

Happy trading!

Tom Bowley

Chief Market Strategist

EarningsBeats.com
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