Carvana Co. (CVNA) is scheduled to report its fourth-quarter results after the close of trading here on Thursday. Let's get out the owner's manual and look up the charts and indicators of the operator of an e-commerce platform for buying and selling used cars.
In this daily bar chart of CVNA, below, I can see that investors have been fleeing this stock for a long time. Prices have traded below the declining 200-day moving average line for the past 12 months. CVNA has crossed the shorter 50-day moving average line largely by moving sideways. The daily On-Balance-Volume (OBV) line has been weak into December, telling me that sellers of CVNA have been more aggressive than buyers. Trading volume has surged unevenly higher since November and could be more short-covering than new outright buying. Prices soared from below $4 to $20 in a few weeks' time. The daily On-Balance-Volume (OBV) line shows a strong rise in January and then a sideways trend. The Moving Average Convergence Divergence (MACD) oscillator is only slightly above the zero line.
In this weekly Japanese candlestick chart of CVNA, below, I see a picture of a stock that is not out of the woods. Prices trade below the declining 40-week moving average line. The price decline from the zenith in 2021 looks like a near-death experience in my opinion. This is not the kind of pattern to which I would be attracted. Trading volume has increased in the past five months but I have trouble believing it is a shift in ownership from weak hands to strong hands. The OBV line has risen in a short period of time and the MACD oscillator is still below the zero line.
In this daily Point and Figure chart of CVNA, below, I see a potential downside price target in the $4.25 area.
In this weekly Point and Figure chart of CVNA, below, I can see that prices reached a downside price target in the $16 area.
Bottom line strategy: I have no knowledge of what CVNA will tell shareholders this evening but the charts and indicators do not inspire confidence.
