AutoZone’s technical analysis
So far in this series, we’ve covered AutoZone’s (AZO) fiscal 3Q17 revenues, margins, and valuation multiples. AZO is now trading at lower valuation multiples than peers O’Reilly Automotive (ORLY), and Advance Auto Parts (AAP).
But remember, while valuation multiples can help investors make informed investment decisions, technical support and resistance levels are crucial in timing entries and exits from a stock.
Key support and resistance levels
On May 23, 2017, AutoZone’s stock price was trading at a bearish $581.40. In July 2016, the stock posted its all-time high of $819.54. The stock tested this major horizontal resistance level near its all-time high in December 2016 year but failed to break this level and turned negative after that.
AutoZone stock is now trading below a descending trendline, which should continue to act as an immediate resistance going forward.
The 14-day RSI (relative strength index) is also a key momentum indicator, and AZO’s 14-day RSI is hovering at 17.1—within oversold territory. This RSI level has confirmed investors’ negative sentiments and suggests that the price could fall further in coming months.
On the downside, AZO’s major horizontal support lies near $540. An early breach of this key support level could attract renewed selling pressure to the stock.
Auto industry updates
Notably, on May 22, Ford Motor (F) made some big changes in its top leadership, and the company named Jim Hackett as its new CEO. For more, check out Market Realist’s series Could Ford’s New Leadership Boost Investor Confidence?