🌯 Chipotle’s “Chip-or-Treat” Reversal
Is the Burrito Back in Play?
After a tough year marked by inflation and soft demand, Chipotle Mexican Grill (CMG) may finally be showing signs of life. Our Quantmatix Medium-Term Reversal Signal just fired — suggesting room for a bounce ahead of the October 29th earnings report.
🔍 Signal Overview
Trigger: Positive Medium-Term Reversal
Q-Score: -4 (bullish reversal threshold)
Interpretation: Historically, this setup marks a short-term turning point in momentum, often preceding 3–8% recoveries within 2–3 weeks.
🎯 Setup
Target 1: $43.35 → +3.7% upside (✅ 76% hit rate)
• Base target — likely if the signal holds above resistance
Target 2: $45.24 → +8.3% upside (✅ 67% hit rate)
• Stretch goal if momentum accelerates
Stop Loss: $36.46 → -12.7% downside (⚠️ 20% hit rate)
• Aligned with monthly support — key level to defend
Confirmation trigger: Sustained move above $41.92 (daily resistance) would validate the reversal and open room to test $43–45.
📈 Technical Context
50-day SMA: $41.57 → potential bullish crossover forming
Weekly SMA: $44.04 (next resistance)
Monthly SMA: $50.50 (long-term downtrend still intact)
Support Levels: $38.19 (daily), $36.78 (monthly)
A break above $41.92 could confirm the signal’s strength and spark a short-covering bounce toward Target 1, while a failure to hold $38.19 would likely invalidate the reversal.
💡 Fundamental Snapshot
Free Cash Flow: ~$1.45B
DCF Fair Value Range: $55–62 → implies 25–40% upside
Forward P/E: ~28.5x (down from ~35x) → valuation compression improving appeal
EPS (TTM): $1.13
Chipotle’s “Chip-or-Treat” campaign, offering weekly free rewards to over 40M loyalty members, aims to reignite traffic and offset the -4% same-store sales dip from Q2. Analysts are warming up — Seeking Aloha recently upgraded CMG to Buy, citing growth potential through digital loyalty, menu innovation, and tech expansion.
🧠 Market Sentiment
Hedge funds are adding exposure, betting on a rebound.
Retail chatter is turning bullish — mentions of a possible short squeeze emerging in forums.
Quantmatix models show positive reversal momentum aligning across short and medium timeframes.
📊 QM Trades Takeaway
With Quantmatix’s reversal signal in play, CMG may be entering the early stages of a recovery phase.
✅ Upside zone: $43.35–$45.24
⚠️ Risk zone: Below $38.19
As earnings approach, watch for confirmation above $41.92 — the move that could flip sentiment from bearish to bullish.