The automotive parts dealer AutoZone (AZO) reported better than expected numbers this Tuesday morning and the stock was trading higher. In our last review of AZO back on September 21 I wrote that "The charts and indicators of AZO are in pretty good shape, but weakness in the broad market could drag down prices. I have no special information about the earnings numbers for AZO but I would take a go-slow approach to buying for now."
Let's check and see how things have progressed.
In this daily bar chart of AZO, below, we can see that it has climbed higher since our September review. AZO is trading above the rising 50-day moving average line as well as the slower-to-react 200-day moving average line. The On-Balance-Volume (OBV) line shows an overall positive trend but some near-term softness. The Moving Average Convergence Divergence (MACD) oscillator is above the zero line and crossing to the upside for a fresh outright buy signal.
In this weekly Japanese candlestick chart of AZO, below, we see a positive looking picture. AZO is in a longer-term uptrend and trades above the rising 40-week moving average line. There is one small upper shadow above $1,900 but it doesn't look like a problem.
The weekly OBV line is bullish and pointed higher, while the MACD oscillator is in a bullish alignment even though it has narrowed in recent weeks.
In this daily Point and Figure chart of AZO, below, we can see an upside price target in the $2,229 area.
In this weekly Point and Figure chart of AZO, below, we used close only price data with a five box reversal filter. Here the software points to a $3,009 price target.
Bottom line strategy: If you can afford to purchase shares in AZO then you need to be able to risk below $1,800. The $2,229 area is our first price target.
