Carvana Seems to Have Some Fuel in the Tank

On-line used car dealer Carvana CVNA has been driving higher on the charts since early November. Will the rally continue or will it stall out? 

Let's check out the charts and indicators. 

In this daily bar chart of CVNA, below, I can see that prices have made good upside progress the past 12 months. Prices trade above the rising 50-day moving average line and above the rising 200-day line. The On-Balance-Volume (OBV) line shows me a positive slope the past year. The trend-following Moving Average Convergence Divergence (MACD) oscillator has just turned to the upside from above the zero-line for a fresh buy signal.

 In this weekly Japanese candlestick chart of CVNA, below, I can see that prices continue to advance from a sizable base formation. Prices trade above the rising 40-week moving average line. Weekly trading volume has been light and that is disappointing and a potential concern. The weekly OBV line has managed to inch higher and that suggests that buyers of CVNA have been more aggressive than sellers. The MACD oscillator is above the zero-line, but has narrowed significantly. 

In this daily Point and Figure chart of CVNA, below, I can see a price target in the $139 area - not all that far away. 

In this weekly Point and Figure chart of CVNA, below, I see a potential price target in the $248 area. 

Bottom line strategy: In my May 2 review of CVNA, I wrote that "Because prices are extended (overbought) vs. the level of the 200-day moving average line I would recommend that traders who may be long CVNA take profits as the shares are likely to correct this upside jump. After a correction the rally may well resume." 

CVNA did correct after its early May jump. Prices could trade sideways in the near-term and traders could probe the long side risking to $110. The $150-$160 area is my price target. 

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