Investor’s Business Daily (IBD) has Avis Budget Group Inc. (CAR) on its lists of stocks nearing a buy point. IBD uses the “Cup with handle” formation to identify entry points.
The daily chart of CAR courtesy of Trading View illustrates the stock’s recent history.
The buy point is just above the cup high at 246.42 made on 10/26/22. What makes this stock particularly interesting is that it also appears to be forming an Elliott wave Impulse pattern since the 09/22/22 bottom. The action since the 10/26/22 peak appears to be an Elliott wave – Horizontal Triangle. If so, it may only need a few days more of moving sideways to complete the pattern. After completion of a Horizontal Triangle there’s usually a thrust in the direction of the primary trend. Which in this case is up.
Caution, the US stock market could be in the late stage of its bull move that began on 10/13/22. The best strategy for going long CAR could be a swing trade – holding for only a few days. The upside gain if CAR breaks above 246.42 may only be 8 to 10%. It’s also possible an upside breakout could be marginal, 1% or less above the buy point. Using tight stops of 1 to 3% below the entry point may be needed. A potential 8% gain to a 3% risk is a reasonable risk/reward ratio.
For more information about the IBD method for analyzing stocks please read “How to Make Money in Stocks” by William J. O’Neil.
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