chuckination

KMX: Cup and Handle Breakout Potential on Earnings

Long
NYSE:KMX   CARMAX INC
I've bough a few cars from KMX over the years, and it's no surprise to me when a company I do business with does well financially on a macro scale. KMX has an excellent model with regional branches and locations handling sales and maintenance and even finance, so they also tap into the financial services marketplace. New sales in the US are slightly down from 2018 to 2019, but not by an alarming margin, but that plays into the hand of used auto sales marketplaces. This is a firm that has had successive growth year over year, and I think they'll do it again. Volume picked back up, and I'm confident that this cup and handle pattern is setting up well. Traders attempting to short at the end of last week finally threw in the towel leaving almost no one shorting this stock right now.

The technicals show KMX breaking out of a horizontal channel after a period of consolidation in May. To their credit, they lost no value for the month of April and would have been a good long term hold the entire if you bought back in late January or early February. They just excceeded and held their September 2018 highest high for three days through a broader short-term consolidation of the US stock market after a record week last week, so this all looks good to me. All short term moving averages are above longer term averages, and the recent consolidation in May has given up some pressure on price strength giving the stock more room to breath. MACD and ADX show the current uptrend picking back up, and the quarterly rate of change indicator is still rising.

All signs point to yes on this one.
Sound engineering requires a firm basis of scientific theory, mathematics, experience, and a little bit of luck; so does a successful long-term investment strategy.

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