Carvana Co. (CVNA) was mentioned during Jim Cramer's fast paced 'Lightning Round' as part of his Mad Money program Wednesday night. Jim said, "I think the car business is really not that good." Let's check the charts and indicators and kick the tires a bit this morning.
In this daily bar chart of CVNA, below, we can see a stock that is still in a downtrend. Prices have firmed a little from a late December low but that has only resulted in prices firming temporarily above the declining 50-day moving average line. In addition, the rally has stopped short of the rising 200-day moving average line.
Trading volume has not expanded from the December nadir and the daily On-Balance-Volume (OBV) line is still in a decline from September telling us that sellers of CVNA are still acting more aggressive than buyers.
The Moving Average Convergence Divergence (MACD) oscillator has firmed back to the zero line but it has narrowed and could generate a new sell signal if prices slip lower from here.
In this weekly bar chart of CVNA, below, we have about two years of price history. Prices are below the rising 40-week moving average line.
The weekly OBV line shows some recent improvement but it is not in an uptrend.
The MACD oscillator has narrowed recently but it hasn't crossed to a cover shorts signal.
In this first Point and Figure chart of CVNA using a "traditional" methodology, below, we can see an upside price target of $53.
In this second Point and Figure chart of CVNA, below, we switch to plotting percent changes. Here the price target is lower and the resistance looks more formidable.
Bottom line strategy: The charts and indicators of CVNA are not compelling. Yes, the Point and Figure charts suggest upside price targets but our other charts are not in alignment. We're likely to find better investment ideas elsewhere.