Lithia Motors Could Correct Before Making New Highs - RealMoney

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During Friday's Lightning Round segment of Mad Money one caller quizzed Jim Cramer about Lithia Motors  (LAD) : "This is a smoking good stock. I'd buy it right here," responded Cramer referring to one of the largest automotive group retailers in the United States.

Let's check out the charts of LAD. 

In the updated daily bar chart of LAD, below, we can see that the shares have been in a strong uptrend the past 12 months. LAD is up four-fold in the past year. Prices are trading above the rising 50-day moving average line and above the rising 200-day line.

The On-Balance-Volume (OBV) line shows a strong rise into the middle of March followed by some weakness as traders moved from aggressive buying to aggressive selling. The Moving Average Convergence Divergence (MACD) oscillator has weakened from the middle of February and moved lower despite prices moving higher. This is a bearish divergence.

In this weekly bar chart of LAD, below, we can see some early signs of weakness. Prices are still in an uptrend above the rising 40-week moving average line.

The OBV line shows a rise to early March followed by some softness. This could be the start of a correction. The MACD oscillator is crossing to the downside for a take profit sell signal. 

In this daily Point and Figure chart of LAD, below, we can see a potential downside price target in the $284 area. This target seems a little too bearish but that is not the point. The point is that the software is reading the X's and O's as bearish with more rally failures than bottoming action.  

In this weekly Point and Figure chart of LAD, below, we used weekly close-only price data with a five-box reversal filter. Here the chart suggests $462 as a possible price target. 

Bottom-line strategy: In the short-run I would anticipate that LAD could correct to the downside. Longer-term iI would look for new highs being made. Consider a correction to be a buying opportunity.

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"correct" - Google News
April 20, 2021 at 01:15AM
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Lithia Motors Could Correct Before Making New Highs - RealMoney
"correct" - Google News
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