Avis Budget Group, Inc. (CAR) reports earnings after the close on Wednesday, Feb. 20. The stock has been under a "death cross" since June 28, which was in play when the stock set its Jan. 3 low of $21.63. The stock popped higher on Monday, Feb. 11, when The Goldman Sachs Group, Inc. (GS) upgraded Avis Budget to buy from sell. This flipped the stock's weekly chart to positive at the end of last week.
The global vehicle rental company's stock closed Tuesday, Feb. 19, at $29.58, up 31.6% so far in 2019 and in bull market territory at 36.8% above its Jan. 3 low of $21.83. The stock is also in bear market territory at 41.2% below its high of $50.32 set on April 10, 2018. Avis Budget appears headed toward a test of its 200-day simple moving average (SMA) at $32.30. Given continued upward momentum, the stock should return to its "reversion to the mean," now at $35.97.
Avis Budget reports earnings after the close on Wednesday, Feb. 20, and analysts expect it to post earnings per share of 31 cents. The company concentrates on airport services, rents trucks, and offers leasing agreements and fleet management services. Some analysts believe that Avis Budget will earn 38 cents per share, which would be a solid beat. The company missed estimates in its report on Nov. 5, but this was factored into the price patterns.
The daily chart for Avis Budget
The daily chart shows that Avis Budget has been below a "death cross" since June 28, when the 50-day SMA declined below the 200-day SMA, indicating that lower prices would follow. This tracked the stock to its Jan. 3 low of $21.63. The 2019 rebound has the stock above its 50-day SMA at $25.58 but still below its 200-day SMA at $32.30.
The stock closed at $22.48 on Dec. 31, which was the input to my proprietary analytics. This resulted in the horizontal line at $28.93, which is my quarterly pivot. My annual risky level is above the chart at $50.91. The close of $26.64 on Jan. 31 resulted in my monthly value level below the chart at $19.63. My weekly pivot lines up with the quarterly level at $29.43.
The weekly chart for Avis Budget
The weekly chart for Avis has been positive since Feb. 15. The stock is above its five-week modified moving average of $27.25. The stock is below its 200-week simple moving average, or "reversion to the mean," at $35.97, last tested during the week of June 29, when the average was $40.79. The 12 x 3 x 3 weekly slow stochastic reading is projected to rise to 51.48 this week, up from 42.26 on Feb. 15.
Trading Strategy: If Avis Budget stock can hold my quarterly pivot at $28.93, it would target the 200-day SMA at $32.30 and the 200-week SMA at $35.97. Traders should hold off on buying shares if the stock gaps below my quarterly pivot at $28.93.
Disclosure: The author has no positions in any stocks mentioned and no plans to initiate any positions within the next 72 hours.