CarMax Inc. (KMX) shareholders are absorbing disappointing third-quarter results here on Thursday and are sending the used-car retailer's shares downward. CarMax is indicated to open in the $52-$51 area, which would be a new 52-week low for the stock. Let's check out the charts of CarMax for what could come next.
In this daily bar chart of KMX, below, I can see a bearish picture through Wednesday's close. Prices are in a longer-term downward trend and KMX trades below the 50-day and 200-day moving average lines. The daily On-Balance-Volume (OBV) line has been weak since August and tells me that sellers of KMX have been and are more aggressive than buyers. The Moving Average Convergence Divergence (MACD) oscillator is below the zero line and bearish.
In this weekly Japanese candlestick chart of KMX, below, I see a bearish picture. Prices are pointed lower and trade below the negative-sloped 40-week moving average line. The candles do not show us a bottom reversal pattern. The weekly OBV line is weak and the MACD oscillator is negative.
In this daily Point and Figure chart of KMX, below, you can see a downside price target in the $44 area.
In this second Point and Figure chart of KMX, below, I used weekly price data and here the software suggests a bearish price objective in the $5 area. Ouch.
Bottom line strategy: Traders should continue to avoid the long side of KMX as I recommended
back on Sept. 29.
Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.
