Carsales: Holding On

This story features CAR GROUP LIMITED. For more info SHARE ANALYSIS: CAR

By Michael Gable 

We maintain our negative bias to the overall market and believe that the S&P500 Index needs to head lower before we see the type of bounce that is worth trading.

Although it is not worth buying anything right now, it is definitely time to make a short-list of the potential buying opportunities. Generally speaking, a stock that holds up well despite the broader market weakness is a stock that produces the best results when the market recovers.

In today's charting section we have a stock that appears to be holding up very well and may provide some very good upside at the next bear market rally, being Carsales.com ((CAR)).

The chart for CAR is a bit messy, but some recent price movements have stood out. Last Friday, we saw CAR put in a higher low before rallying very strongly off that low and closing at the highs of the day (circled).

This is known as a bullish reversal. Volume was also very large on that day. It is too early to treat that as a buy signal, but it is a sign that we might see some good buying support step in down here.

Ideally, CAR should go on to build a base now and we don't want to see it trade under $18 anymore. If it can do that for a few weeks or so and then push above major resistance at $20, then we would be comfortable that it is on the way back up. It is early days though, so CAR is one to keep an eye on for now.

Content included in this article is not by association the view of FNArena (see our disclaimer).
 
Michael Gable is managing Director of  Fairmont Equities (www.fairmontequities.com)

Fairmont Equities is a share advisory firm assisting Private Clients with the professional management of their share portfolio. We are based in the Sydney CBD but provide services to private clients across Australia. We believe that the concepts of fundamental analysis and technical analysis of stocks are not mutually exclusive. Regardless of whether you are a trader or long term investor, combining both methods is crucial to success. As a result, the unique analysis of Fairmont Equities is featured regularly in the media such as Sky News Business, CNBC, The Australian Financial Review, and the ASX newsletter. Contact us for a free trial of our research and information on our portfolio management services. 

Michael is RG146 Accredited and holds the following formal qualifications:

• Bachelor of Engineering, Hons. (University of Sydney) 
• Bachelor of Commerce (University of Sydney) 
• Diploma of Mortgage Lending (Finsia) 
• Diploma of Financial Services [Financial Planning] (Finsia) 
• Completion of ASX Accredited Derivatives Adviser Levels 1 & 2

Disclaimer

Fairmont Equities Australia (ACN 615 592 802) is a holder of an Australian Financial Services License (No. 494022). The information contained in this report is general information only and is copy write to Fairmont Equities. Fairmont Equities reserves all intellectual property rights. This report should not be interpreted as one that provides personal financial or investment advice. Any examples presented are for illustration purposes only. Past performance is not a reliable indicator of future performance. No person, persons or organisation should invest monies or take action on the reliance of the material contained in this report, but instead should satisfy themselves independently (whether by expert advice or others) of the appropriateness of any such action. Fairmont Equities, it directors and/or officers accept no responsibility for the accuracy, completeness or timeliness of the information contained in the report.
 

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