Chipotle (CMG), Fossil (FOSL) Oversold Bounce Candidates After Earnings Debacles

Chipotle (CMG) has been crushed since a less than stellar earnings report this quarter, but may be in for an oversold bounce off the lows since pulling in over 35% off 52-week highs. Although Chipotle actually beat earnings per share estimates – $2.56 versus $2.30, the company missed on expected revenue projections and same store growth figures by a wide margin. The day following the announcement, the stock declined by over 20% in the worst trading day since its 2006 IPO. The stock has traded in something of a steady downtrend ever since, and is now priced below $300 for the first time since October of last year. A move back above $303 could lead the stock higher for a quick trade above the 9-day moving average at $322.85.

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After seeing a gap down of over 30 points after its most recent earnings, Fossil (FOSL) was able to establish a base a may be ready to challenge its local resistance. The global designer, marker, and distributor of consumer fashion accessories, most notably watches, suffered the huge gap down after a its May earnings report. The most damning aspect of the report was a diminished outlook on its earnings per share. Instead of collapsing, the stock was able to find a nice level of support established a sideways channel ranging from $65 to $75. The stock may now be poised to break the channel, as it is currently sitting at the top range. If it breaks, the next small level of resistance comes at $80. With some momentum and high volume, the stock may be able to test the much deeper levels of resistance that come from the start of the gap.

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By Marc Sperling

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