Key technical levels
So far in this series, we’ve covered Advance Auto Parts’ (AAP) fiscal 3Q17 revenues, profit margins, and valuation multiples. Currently, AAP’s forward price-to-earnings ratio is trending lower than those of O’Reilly Automotive (ORLY), but it is higher than AutoZone (AZO).
While valuation multiples can give help investors (XLY) make informed investment decisions, technical support and resistance levels are crucial to time the entry and exit from a stock.
Key support and resistance in AAP stock
On November 15, 2017, AAP stock was trading at $91.58. On November 8, the stock tested a key horizontal support level near $79.00 and bounced back from that level. This key technical level near $79.00 should act as a key support level in the coming weeks.
On the day of Advance Auto Parts’ fiscal 3Q17 earnings release, its stock attracted fresh buying and closed above its 50-day SMA (simple moving average), reflecting some strength. Only an early violation of the $79.00 support area could trigger a fresh sell-off to take the price lower toward the next support level near $66.00.
Also, AAP’s 14-day RSI (relative strength index) momentum indicator was hovering at 59.9, above the line of equilibrium. This level of RSI reflected minor strength in the underlying momentum. On the upside, an immediate resistance in AAP stock lies near $99.50.
Auto industry’s 3Q17 earnings
In the last four weeks, all mainstream automakers (XLY)—including General Motors (GM), Fiat Chrysler Automobiles (FCAU), and Ford (F)—have announced their 3Q17 results. All these auto companies reported year-over-year positive growth in their 3Q17 earnings.