I have a dilemma…I recently invested a considerable amount into Chipotle (CMG) and am second guessing myself already. Maybe I’m a little shortsighted in this situation, but I’ll go on.

So, my basis for investing in Chipotle was based on my investment in McDonald’s (MCD) earlier this month. I got in at around $50 and got out at $56 a little over a week later. McDonald’s was down from $63 in early December and was definitely oversold.

It was below it’s bottom Bollinger Band and its OBV, RSI, and stochastics all suggested it was significantly oversold. McDonald’s had dropped so much because they reported slightly lower than expected earning for Q4 of ‘07 and of course, the market overreacted. McDonald’s blamed it on the weather, then predictions came out saying McDonald’s expected higher earnings for Q1 and big growth overseas. By the way, stocks like McDonald’s and Wal-Mart are good stocks to hold this year during the recession, that’s right, I said it.

Now, Chipotle is in a similar situation. It’s down from $160 in early December to about $100. Chipotle also reported low earnings, but doesn’t have support overseas, and hits more upper-income demographics than McDonald’s (not as good during a recession, but I’m calling short-term).

Like McDonald’s, it was recently below it’s lower Bollinger Band and both the RSI and Stochastics suggest it is severely oversold. However, the OBV is so low, suggesting they is no buying interest…not a good sign. Also, the stock did not retrace back to its moving average like it had been previously, obviously causing me some stress…

Conclusion? I’m panicking and I trust my analysis, and will continue to hold :). Expect an update later this week.

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Tags: bollinger band, chipotle, cmg, investing, mcd, mcdonalds, recession, rsi, stochastics, stocks, wal-mart, wmt

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