Free Agency and the Draft: Not Just for the NFL

Stocks are enjoying a bit more of a relief bounce from Monday's selloff after the small caps in the Russell 2000 Index exuded impressive strength this morning. Still, we know the FOMC at the bottom of the hour is a well-defined risk event and should be treated as such, meaning we expect to see violent whipsaws from 2pm EST until the closing bell across most asset classes, including equities. 

In the meantime, it is worth noting that Chipotle Mexican Grill is up by more than 5.5% as I write this, with price peeking its head above CMG's 200-day simple moving average. which is the yellow line on the daily chart, below. In addition, CMG is threatening to break a long, sideways bottoming base higher. 

This CMG move seems to be rather stealth, given how many longs likely gave up on the name in recent quarters given the stock's lackluster action and declining brand popularity in an increasingly saturated market. Indeed, suffering from brand maturity in a saturated market is not a good economic recipe, in general. 

Still, just weeks after hiring former Taco Bell chief Brian Niccol as its new CEO, Chipotle is bringing another executive from the Mexican-themed fast-food company on board. Chris Brandt, who led marketing efforts at Taco Bell for years, will take over as Chipotle’s chief marketing officer next month.

Thus, CMG is somewhat comparable to a losing NFL team making offseason moves in free agency and the draft to improve its ball club. We can debate whether these changes will indeed offset CMG's issues, or even improve them dramatically, but the market is clearly applauding the efforts initially. 

Going forward, if CMG can hold over this $330 level I expect to see a bit more buying interest with a major hurdle comes late next month during April 24th earnings. 

At a minimum, this type of news flow and price action should make shorts uneasy, especially if $330 converts into support in the coming weeks.