Hello traders, CREDIT ACCEPTANCE CORPORATION is in a bullish push with strong buy volume issued and a large upside down hammer candle. On the TIMEFRAME M1 we see a maubozu with a large volume of exchanged purchase, it goes in the direction of higher of the bollinger. In order to test it then this zone will be yielded to arrive on the top of the stabilization zone....
So my first short and believe it or not I shorted this many moons ago at 40 covered at 20 but then went to single digits. The thesis has always been simple - They are a lender of last resort for auto buyers and yet the companies bonds are rated AAA - how do they do this - insurance on their stuff followed by reinsurance followed by reinsurance. Interesting...
This broke support around $207 and continued down below $200. New support came in @ $196-198.
If it can't get thru yesterdays $207 it looks lower. We took off half @ $199.12. Using stop on balance @ $207.25 and if not triggered will try to buy it back near 194-196...OZ
a close under $207.64 will break this lender to the auto industry and take it back towards $180.
Risk is well defined as a close over $220 so a risk/reward of 3:1 seems an appropriate to me.
Options are thin and expensive but limiting size or using a bear spread can be employed here...OZ
The falling trendline in this triangle has been touched numerous times and it all got rejected. I will be looking to see if it happens one more time and I will be entering for a short position for a target of $161 or $140.
