AutoZone (AZO) is a popular retailer of automotive secondary market parts and accessories. As auto sales remain firm, sales of replacement parts rise.
AutoZone reports earnings before the open Tuesday. Analysts expect the company is to report earnings of $9.34 a share, and 60% of those who rate the stock give AutoZone a buy rating. As a cautionary note, 25 analysts have a sell rating on the stock. Credit Suisse says that AutoZone is the best way to play the auto parts segment of the auto industry.
Let's see what the charts say.
The daily chart shows the Fibonacci retracements of the rally from the Feb. 8 low to the July 11 high. Investors would trade a stock in this manner when a "golden cross" ends, which it did on Oct. 10. A "golden cross" was confirmed on Nov. 19, 2014 when the stock closed at $568.51. A "golden cross" occurs when the 50-day simple moving average rises above its 200-day simple moving average indicating that higher prices lie ahead. When this signal ended on Oct. 10 the stock closed at $764.44, so a solid gain was captured.
The weekly chart shows a red line through the price bars, which is the key weekly moving average (a five-week modified moving average). The green line is the 200-week simple moving average considered the "reversion to the mean."
The study in red along the bottom of the charts is weekly momentum (a 12x3x3 weekly slow stochastic), which scales between 00.00 and 100.00, where readings above 80.00 indicates overbought and readings below 20.00 indicates oversold.
A negative weekly chart shows the stock below its key weekly moving average with weekly momentum declining below 80.00 in a trend towards 20.00. A positive weekly chart shows the stock above its key weekly moving average with weekly momentum rising above 20.00 in a trend towards 80.00.
Here's the daily chart for AutoZone.
Courtesy of MetaStock Xenith
AutoZone closed Thursday at $780.76, up 5.2% year to date, 14.6% above its Feb. 8 low of $681.01. The stock is 4.7% below its all-time intraday high of $819.54 set on July 11.
The horizontal lines are the Fibonacci retracements of the rally from the Feb. 8 low to the July 11 high. After the high was set the stock found the 23.6% retracement of $786.83 to be a magnet since July 19, including on Dec. 1. In-between, the 38.2% retracement of $766.62 was a magnet between Aug. 26 and Nov. 21.
The 50% retracement of $750.28 was a magnet between Aug. 29 and Nov. 16. The 61.8% retracement of $733.93 was a magnet between Sept. 6 and Nov. 14. This up and down volatility, could have captured the up and down volatility between $733.93 and $786.83.
Here's the weekly chart for AutoZone.
Courtesy of MetaStock Xenith
The weekly chart for AutoZone is positive with the stock above its key weekly moving average of $764.06 and well above its 200-week simple moving average at $606.56. The weekly momentum reading is projected to rise to 49.68 this week up from 39.59 on Nov. 25.
Investors looking to buy AutoZone should do so on weakness to $748.62 and $731.29, which are key levels on technical charts until the end of December. Investors looking to reduce holdings should consider selling strength to $876.02, which remains a key level on technical chart until the end of 2016.