Earnings Play: Copart

Copart's stock price is overbought and just below record highs, here is how to play it.

Charts (2)

On Wednesday, after market, Copart (CPRT) is anticipated to report fourth quarter EPS of $0.38 compared to $0.60 last year on revenue of approximately $436.3 million vs. $542.6 million a year earlier. The company is a provider of online auctions and remarketing services for salvaged vehicles, and on August 13th, the company opened a new 56-acre location in Jacksonville North, Florida, marking its 14th location in the state.      

Technically speaking, on a daily chart, Copart's stock price has been rising and holding above a bullish trendline since mid-March. The RSI is currently 78 and has been in overbought territory since the beginning of August after price broke out from its 92.50 level. Price is currently sitting just below the stock's all-time high of roughly 105.00. Given that the RSI has spent a month in overbought territory and that the daily real bodies of the candle sticks are small, it is likely that price will pull back. If price pulls back and holds above the rising trendline, then price will probably bounce, break through 105.00 and continue its advance to 117.50. However, if price falls below the trendline, then it might drop back to the 92.50 support level. If price cannot find support at the 92.50 level, it could possibly slip further to 86.50, a bearish move that could signal a new short-term downtrend.            

Source: GAIN Capital, TradingView

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