AutoZone Looks Like It Will Be Driving Higher

Let's check out the charts of the country's largest auto parts chain.

In his recent Real Money column "This Is a Brave New Economy We're In" Jim Cramer noted that investors have also been buoyed by stimulus checks which have been flowing into companies like AutoZone Inc. (AZO) . 

Let's check out the charts of the country's largest auto parts chain.  

In the daily bar chart of AZO, below, we can see that prices turned lower in December but bottomed with the broader market around the middle of March. Prices quickly recovered after a brief retest of the March low in early April. Prices are now above the rising 200-day moving average line and above the rising 50-day moving average line.

Interestingly, the On-Balance-Volume (OBV) line made its low at the end of February and not the middle of March. The rising OBV line tells us that buyers of AZO have been more aggressive. The Moving Average Convergence Divergence (MACD) oscillator turned bullish by the middle of April and it is still positive. 

 

In this weekly bar chart of AZO, below, we can see the extent of the 2020 decline and its quick recovery. Prices are back above the rising 40-week moving average line and within "striking distance" of the December 2019 peak.

 

The weekly OBV line shows a gentle decline into the March low and subsequent firming with the line close to its all-time high. The MACD oscillator has crossed to the upside for a cover short buy signal and is close to crossing the zero line. 

 

 

 

In this daily Point and Figure chart of AZO, below, we can see an upside price target of $1,380.  

 

 

 

Bottom-line strategy: Shares of AZO are pointed up and traders should operate from the long side risking a close below $1,050 for now. The $1,380 area is our price objective. 

 

Employees of TheStreet are prohibited from trading individual securities.