On Tuesday, July 23, AutoNation, Inc. (AN) will release second-quarter results, with the stock trading between its monthly value level of $36.82 and its quarterly dangerous level of $44.73. AutoNation is a multi-brand automotive dealership that sells new and used automobiles as well as related services.
On June 28, 2019, the stock completed the first half of 2019 at $41.94, becoming a vital input to my unique analyses. The yearly hazard level of $64.62 is carried over from the first half of the year. At $29.67, the value level for the second half of 2019 is much lower than the market. The value level for July is $36.82, with the hazardous level for the third quarter at $44.73 outlining the trading range.
The weekly chart indicates a “golden cross,” while the daily chart shows a “golden cross” since the week of June 14, when the stock closed at $41.24. AutoNation is fundamentally inexpensive, with a P/E ratio of 9.28, but it is not a value play since it does not pay a dividend, according to Macrotrends.
Analysts predict AutoNation will announce earnings per share of $1.08 on Tuesday, July 23 before the market opens. Wall Street anticipates a year-over-year fall in profitability due to decreasing sales. The stock finished last week at $42.05, up 17.8% in 2019, and is in bull market territory, trading 28.1% higher than its March 15 low of $32.83. On April 26, the stock reached a high of $43.36 for the year.
The daily chart for AutoNation
AutoNation has been trading above a “golden cross” since June 5, when the 50-day simple moving average (SMA) crossed above the 200-day SMA, signaling that higher prices are on the way. Since this positive signal, weakness has held the 50-day SMA, which is now at $41.00, and the stock has risen over its 200-day SMA, which is currently at $38.22. The stock has been bouncing back and forth between its monthly value level of $36.82 and its quarterly hazardous level of $44.73.
The weekly chart for AutoNation
AutoNation’s weekly chart is bullish, with the company trading above its five-week modified moving average of $41.35. The stock is trading below its 200-week simple moving average, or “reversion to the mean,” at $46.49, which was last challenged on June 22, 2018, when the average was $51.96. The weekly 12 x 3 x 3 slow stochastic reading concluded last week at 78.74, just short of the overbought threshold of 80.00.
Buy AutoNation shares on downturn to the monthly value level of $36.82 and sell on strength to the quarterly risky level of $44.73.
My value levels and dangerous levels are based on the past nine weekly, monthly, quarterly, semiannual, and annual closing. The first set of levels was based on December 31 closures. The initial yearly level is still in effect. Each week, the weekly level varies. Each month, the monthly level was modified, most recently on June 28. At the end of June, the quarterly level was also altered.
My hypothesis is that nine years of volatility between closing is sufficient to infer that the stock has factored in all probable bullish and negative occurrences. Investors should purchase shares on weakness to a value level and sell shares on strength to a risky level to capture share price volatility. A pivot is a value or danger level that has been breached within its time period. Pivots operate as magnets that are likely to be tried again before their time horizon ends.
The author has no holdings in any of the stocks mentioned and has no intentions to start new positions in the next 72 hours.
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