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"When a falling stock becomes a screaming buy because it cannot conceivably drop further, try to buy it 30 percent lower." Al Rizzo (1986)

Back in late June of this year I saw the handwriting on the wall when it came to Chipotle Mexican Grill (NYSE:CMG). Back then it was trading as high as $416.74 on June 26, 2012.

On June 28th I posted an article warning that CMG was overpriced and ready for a terrible tumble.

Since then the stock has dropped over 26% trading at an intra-day low on July 20th of $307.20 on almost 10 million shares. In my opinion the stock's price correction isn't over yet.

As investors and institutions wake up to what a stock like CMG is worth versus the ridiculous valuations (still trading at 38 times current earnings and 29 times forward earnings), a further sell-off awaits.

Take a look at the 3-month chart below which includes the 200-day moving average (m.a.) and the Bollinger Bands, and you get the ugly picture of what can happen to overpriced stocks.

Chart forChipotle Mexican Grill, Inc. (<a href=

So, which stocks may be next to be taken to the slaughter-house?

Priceline.com Inc. (NASDAQ:PCLN) may be on that short list. They don't announce their quarterly earnings until August 7th. Shareholders better cross their fingers that this richly-priced stock exceeds expectations.

As recently as June 29th only 6.2% of PCLN 49.42 million share "float" was sold short, so the chance of the stock rising as a result of a "short squeeze" is remote.

On the contrary, virtually 100% of the outstanding shares are owned by institutions and insiders apparently own less than 1%.

All it would take for the price of PCLN to begin to implode would be the unexpected creation of a large short position followed by the company's major stockholders to begin to unload their shares.

I'm not predicting it, but their situation looks frighteningly similar to other stock collapses like Chiptole and First Solar (NASDAQ:FSLR).

Priceline is a very profitable company and they've been growing their earnings impressively. Their Return-on-Equity is a stellar 50% and in the first quarter of 2012 they produced year-over-year earnings growth of 73.70%.

Yet the current stock market mood is quite unforgiving when a company like PCLN doesn't exceed earnings expectations enough to warrant its shares selling at 13 times book value and 7.3 times sales (trailing-twelve-months).

As the 12-month chart below reminds us, PCLN can and does at times fall below its 200-day m.a., which can be precipitous. Just look at what happened to the stock last November as the chart illustrates.

Chart forpriceline.com Incorporated (<a href=

Other stocks that could find themselves suddenly falling lower on disappointing earnings and a weak economy include:

Mastercard (NYSE:MA) which trades at a rich multiple to earnings and reports 2nd quarter earnings on August 1st, and...

Hershey Foods (NYSE:HSY) which in my opinion is as vulnerable to a significant correction as CMG. A food company trading at almost 25 times current earnings is ludicrous.

Yes, they've put up some nice numbers in the past and pay a 2.1% dividend. But as their 12-month chart clearly illustrates, we're talking about a stock moving ahead of itself too quickly and too far.

Chart forThe Hershey Company (<a href=

They'll report earnings on Thursday July 26th. The results will be telling.

Which stock would be voted, "least likely to have an earnings disappointment?" My guess would be Apple (NASDAQ:AAPL) which reports its 2nd quarter earnings and forward guidance on Tuesday, July24th.

I'm not predicting a miss or a price correction, but as one seasoned stock analyst reminded me, "it's the spider you don't see that bites you."

Expectations have been dangerously high for AAPL quarter after quarter. One miss or an unforeseen downward revision in guidance and "watch out below!"

If you want another example of what happens in this market malaise when companies lower guidance or miss their numbers take a look at Gold Resource Corp. (NYSEMKT:GORO).

GORO dropped 31% in one day (July 20th) after it disappointed on its quarterly production numbers and lowered its guidance going forward.

So take a look at the stocks you own and determine for yourself if the market has been too generous with the share prices awarded them.

Remember too that the big traders and the smart money loves to target high-fliers that have moved up rapidly in a delusional burst of reckless enthusiasm. The higher they've climbed, the harder they can fall.

Source: Chipotle Nosedives - Which Stocks May Implode Next?