For the Executive Decision segment of "Mad Money" Thursday, Jim Cramer sat down for the first time with Ernie Garcia, chairman and CEO of Carvana Co. (CVNA) , the online auto vendor that's disrupting the used car market. Shares of Caravan are up 159% for 2019.
Garcia said Carvana's goal is to provide customers with a better car buying experience. It offers a one-stop shop that not only provides a wide selection of vehicles, but also financing options. Carvana will even deliver your vehicle right to your door.
Garcia said one of the biggest things that has changed in the auto industry is that customers communicate more with each other. That means if you provide a great experience, customers will share that experience for you. That's why Carvana has products such as its car vending machines now available in 20 markets across the country.
Let's check and see if the charts look as good as the story sounds.
In this daily bar chart of CVNA, below, we can see that prices bottomed out in the December-February time period. CVNA rallied up to early May before a three-month correction that looked like distribution (selling). A gap to the upside in early August changed the picture to bullish as volume surged. Now CVNA is above the rising 50-day moving average line and the bullish 200-day line.
The On-Balance-Volume (OBV) line is generally constructive from February, but it has been moving sideways as prices made new highs, which is not the best setup. The Moving Average Convergence Divergence (MACD) oscillator has crossed to a take profits sell signal.
In this limited weekly bar chart of CVNA, below, we can see a more constructive picture. Prices are above the rising 40-week moving average line. Trading volume has increased the past 12 months and the OBV line has confirmed the new price highs with its own new high. The MACD oscillator is bullish on this longer time frame.
In this Point and Figure chart of CVNA, below, we can see the price action without gaps. We can see the new high at $84.75 clearly as well as a potential price target of $98.57.
Bottom line strategy: Traders could look to go long on a shallow dip to around $80, risking below $75. The $98-$100 area is our target.