AAP- Strong BuyAAP is near a monthly high now. If it break and sustain above 138 then we can see 152-175 till end of this month. Monthly chart is very strong,so we can accumulate above 138 and can add more if pullback happens near 130-135 levels.
Aap
AAP - Possible Bullish Swing TradeI am setting up a possible bullish swing trade on AAP. This is what I want AAP to do, breakout above resistance at $119.00 then pull back and re-test the old resistance which now should provide support. If AAP does breakout I will enter a limit order to buy a little above support, maybe at $119.35. If AAP does breakout I would hope to see a re-test fairly quick, maybe 3 - 5 days.
If by chance AAP does not re-test and just keeps moving higher or does not breakout and moves lower from here, no big deal I will just look for another trade.
AAP - Fallen angel long from $106.47 to $127.23, Sep $110 CallsAAP seems forming a nice fallen angel pattern. It also has some insider buying. We think it has good upside potential.
To play this We would consider September $110 calls are $3.80.
* Trade Criteria *
Date First Found- July 25, 2017
Pattern/Why- Fallen angel pattern
Entry Target Criteria- Break of $106.47
Exit Target Criteria- $127.23
Stop Loss Criteria- $99.07
Please check back for Trade updates. (Note: Trade update is little delayed here.)
50% downside in AAP (Classic Head and Shoulder)Classic Head and Shoulder formation. AAP was in a great business till
a) Starboard took hold of the board, and
b) Their market started disappearing to online retailers.
c) Newer E-cars require much less of this
d) Their inventory and margin issues are still unresolved. And these are tough things to resolve. You either get them right from beginning (Walmart, Costco) or you get them wrong (kmart, Rona(canadian)).
At this point, there is too much fighting on their board to make things work for the company, and increasingly every mechanic and do-it-selfer is ordering parts online. I got my windshield for infinity at $160 shipped directly. Compare that to retailer prices of $400-$647 (yes at the dealer).
Looking at daily volume, it smells of distribution.
Pairs Trade - AZO a sell and AAP a buy Look at the history of these two stocks going back to 2011. They are identical in performance and yet AAP reports its earnings FIRST and the stock tanked 30 points or 15% last month. Autozone reports on Dec 8th and could face a similar fate as AAP since they are in the same business.
Lately, new car sales have taken off to the upside and at some point investors could back off on the sky-high valuations of these stocks that have been delivering steady and consistent profits gains over the years.
It's never easy to call the end of a trend, but I'm thinking this is a low risk trade to be long AAP and short AZO into earnings next week. You can manage risk best using options to set up this trade.
Target 10% down on AZO relative to AAP. Your profit could come from one side or the other, but you would think that the catalyst would be the earnings report on 12/8/2015.
Stay tuned.
Tim
AZO 776.28 last
AAP 159.94 last
