CMG Expectation of Reversion to Mean after Earnings Disappointme
Updated
I think CMG has accumulated way too much hype and expectation in the recent run-up, which has caused the stock to rise above a flagging technical indicator. I expect that Earnings coming out Tuesday after market close will either disappoint or will fail to sustain the bull run any further, and that CMG will "revert back to the mean" by forming a significant down-leg returning it to the steady-state zig-zag pattern of matching up-and-down trends.
Trade active
I have a current short position with enough ready capital to conduct a short-term dollar-cost-average into a larger short going through Earnings reporting next week, in anticipation of a subsequent short-term down trend at which point I shall exit at or around either (1) completion of 5 days of forming the next down-leg, or (2) on the 3rd of 3 back-to-back down days.Note
Holding short position. My position survived the short-term pop caused by short-term trading wherein CMG actually reached above $500 during after-hours trading upon earnings release, however, as expected, the party fizzled and I have added to the short position through short-term dollar-cost-averaging expecting a reversion to the mean. Evidence from other traders who posted on the matter suggests this might be the beginning of a short-term drop as CMG reverts back to its mean. Expectations are a drop toward its resistance level in mid-440s, then a reversal back in the direction of the moderate-term bull direction. I will pivot from bear to bull in the 450s.Note
As a side-note, to keep up regular options writing operations, I have written PUT options on CMG at a $450 strike expiring this Friday (4 days). I expect those options to expire worthless.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.