CarMax, Inc., through its subsidiaries, operates as a retailer of
used vehicles in the United States. It operates in two segments, CarMax
Sales Operations and CarMax Auto Finance. It sells vehicles that do not
meet its retail standards to licensed dealers through on-site wholesale
auctions, as well as sells new vehicles under franchise agreements. The
company also provides customers financing alternatives through its
finance operation, CarMax Auto Finance, as well as through its
third-party financing providers. In addition, it offers a range of other
related products and services, including the appraisal and purchase of
vehicles directly from consumers; sale of extended service plans and
guaranteed asset protection services; and vehicle repair services.
Take a look at the 1-year chart of CarMax (NYSE: KMX) below with added notations:
After bolting higher from mid-October until the end of December, KMX
has been trading sideways over the last 3 months. During the sideways
move the stock has formed a common pattern known as a rectangle. A
minimum of (2) successful tests of the support and (2) successful tests
of the resistance will give you the pattern.
KMX’s rectangle pattern has formed a resistance at $68 (red) and a
$62 support (blue). At some point the stock will have to break one of
the two levels.
The Tale of the Tape: KMX is trading within a
rectangle pattern. The possible long positions on the stock would be
either on a pullback to $62 or on a breakout above $68. The ideal short
opportunity would be on a break below $62.
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