Technical analysis
Price | $ 16.20 | 52 weeks range | $ 15.40 - $ 25.68 |
Beta | 1.65 | Volume/ average | 76,107/ 91,868 |
Sector | Cosumer Cyclical | Dividend | N/A |
Motorcar Parts of America Inc is a United States-based manufacturer, remanufacturer and distributor of automotive and light truck aftermarket applications.
MPAA after failing to break out of the strong resistance at $ 25, the stock began a long bullish descent which we believe, following price confirmations, may soon reverse to the upside.
Price
On the daily chart, we can see the stock's almost regular swing between $ 15 and $ 25 from 2019 to date. Looking at a pure price fluctuation, the risk / return of the stock has certainly moved upwards: the $ 15-17 area has played a supporting role and reversal to the upside in the past.
The strong support area combined with the bearish trendline in place since June 2021, makes us understand how the stock is close to strong fluctuations.
On the weekly chart, the scenario becomes even more interesting because we can see how in November 2020 the stock broke an important bearish trend line and is only now carrying out a back-test. In addition, from March 2020 the stock began to record rising lows: a possible sign of a change in trend.
Indicators
Looking at the MACD and RSI indicators: both show a positive divergence with the price fluctuation. In particular, from November 2021 we can see a decreasing price of increasing indicators: we consider this divergence, on a strong support area, a positive indicator of possible increases in the medium term.
On the weekly chart, these indicators report similar information: MACD close to a bullish cross and flat RSI from September 2021 despite the declining price.
Moving averages
In the case of MPAA, we believe that it is the 50-day average that can give the greatest explanations on short-medium term fluctuations: at the moment the price continues to be rejected by the average and we believe that only a consolidation above it can represent a possible buy signal.
On the weekly chart, reaching the 50-day average represents, in our opinion, a short-term target.
Conclusions
At current prices, we believe that MPAA represents an excellent opportunity to understand whether to build a medium-long term position or wait for a further decline.
The coincidence of the long-term bearish trendline with the strong support level makes us understand that the stock is close to strong fluctuations: in the event that the break is to the upside, we identify $ 17.50 - 18.50 as an interesting buying area given the possible consolidation above the 50-day average and consequent change in trend.
In the event that MPAA does not comply with the hypothesized formation, we identify the area of $ 13-14 as a possible support and subsequent analysis.
Entry range $ 17.50 - $ 15.50
Target 1 € 20.00
Target 2 € 24.00
Stop loss € 15.00
Graphs
OTB Global Investments
16 February 2022
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