CarMax Crash … What’s Next ?

First, The Dead Cat Bounce …

What was said back then

“As the economy (if you can call it that) falls off the cliff, one of these two (KMX, CVNA), is not likely to survive.”

It looks like Carvana is swirling down its ‘disruptive’ vending machine wormhole, leaving CarMax to pick up whatever’s left of the car ‘consumer’.

The latest earnings release of KMX, confirms what’s left of the typical consumer’s purchasing power, is evaporating if not completely gone.

Still Clueless …

It’s not necessarily the linked earnings report on KMX that’s important, but the comments.

We’ll not call out any specific one but after reading them, there’s an uneasy sense, the typical American is still wandering around in a type of hypnotic, delusional state, namely, mass psychosis.

They’re stunned … ‘looking for the bottom’.

Everyone has their own timeframe but let’s see where an ultimate bottom for KMX, might be on the charts below.

CarMax, KMX, Yearly Chart

The big … big picture

There are three-months left in the year but already the thrust energy lower (magenta arrow) for KMX, is the highest in nearly 26-years of data presented.

Not even the ’08 – ’09, meltdown had downside energy anywhere close to what’s happening now.

That’s a clue in itself, we’ve got a long way to go.

How long, is long?

The quarterly chart of KMX gives us a clue where we might see a ‘bottom’.

CarMax, KMX, Quarterly Chart

Above, we’ve got a terminating wedge (blue lines) that’s been decades in the making.

As the magenta arrow shows, there could be small blip up to resistance in the 85-area before potentially rolling over into a descent that projects to the 4.00, level.

If and when that happens, CarMax rival Carvana, may be long gone; its disruptive vending machines possibly being used as homeless shelters or insect farms.

Stay Tuned

Charts by StockCharts

Note:  Posts on this site are for education purposes only.  They provide one firm’s insight on the markets.  Not investment advice.  See additional disclaimer here.

The Danger Point®, trade mark: No. 6,505,279

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