Penske Automotive Group, Inc. operates as a transportation services company. It operates retail automotive and commercial vehicle dealerships principally in the United States and Western Europe; and distributes commercial vehicles, diesel engines, gas engines, power systems, and related parts and services primarily in Australia and New Zealand. The company engages in the sale of new and used motor vehicles; and related products and services, such as vehicle service and collision repair services, as well as placement of finance and lease contracts, third-party insurance products, and other aftermarket products.
Take a look at the 1-year chart of Penske (NYSE: PAG) below with my added notations:
Over the past 3 months, PAG has hit the $40 resistance area (red) on 3 separate occasions. In addition, the stock has been climbing a trend line of support (green) since the beginning of April. Together, these two lines have formed an ascending triangle on PAG. Eventually, the stock will have to break either the $40 resistance or the triangle support.
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The Tale of the Tape: PAG is winding up between two key levels. A long trade could be made at the triangle support or on a break above $40. A break below the trendline would be an opportunity to enter a short trade.
Before making any trading decision, decide which side of the trade you believe gives you the highest probability of success. Do you prefer the short side of the market, long side, or do you want to be in the market at all? If you haven’t thought about it, review the overall indices themselves. For example, take a look at the S&P 500. Is it trending higher or lower? Has it recently broken through a key resistance or support level? Making these decisions ahead of time will help you decide which side of the trade you believe gives you the best opportunities.
No matter what your strategy or when you decide to enter, always remember to use protective stops and you’ll be around for the next trade. Capital preservation is always key!
Christian Tharp, CMT
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