AutoNation (AN) - Get Report was upgraded today by TheStreet's Quant Ratings service. To a chart watcher like me it's not surprising, as prices broke out on the upside recently from a five-month consolidation pattern. With our favorite indicators aligned on the upside, I would look for further gains from AN.
But like purchasing a new car, let's look things over a lot closer and take a test ride before signing on the dotted line.
In this daily bar chart of AN, below, we can see a sideways pattern from April through August. Prices trade between $38 on the downside and $44 on the upside until the very end of August. Then prices gap to the upside to close well above the 200-day moving average line. The 50-day moving average line has been rising since early July and it is not far below the 200-day line so a bullish golden cross could happen soon. While the volume pattern from April is pretty neutral looking the daily On-Balance-Volume (OBV) line shows a slight bullish bias. A rising OBV line tells us that buyers are more aggressive. Since early August before the gap the OBV line rises faster. The Moving Average Convergence Divergence (MACD) oscillator turns up above the zero line in August for an outright go long signal.
In this weekly bar chart of AN, below, we can see that prices are breaking the downtrend from late 2015. Prices are above the flattening 40-week moving average line. The weekly OBV line has turned up strongly the past two months and the MACD oscillator has crossed above the zero line for an outright go long signal.
Bottom line -- a quantitative upgrade, bullish charts and indicators. Just add in an in dash navigation system, heated leather seats and a few other perks and I am sold. Look for AN to revisit its January highs by year end.
Click here to sign up for Quant Ratings, where you can read our full report on AutoNation or more than 4,000 other stocks that our service rates in real time every market day. However, please note that our Quant Ratings service assesses stocks using a proprietary computer model that runs a variety of factors through quantitative and technical analysis. Ratings do not necessarily reflect the opinions of Jim Cramer or other columnists, who may use different criteria to grade stocks.
(This column originally appeared at 3:39 p.m. ET on Real Money, our premium site for active traders. Click here to get great columns like this from Bruce Kamich, Jim Cramer and other writers even earlier in the trading day.)
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