Lithia Motors (LAD) is featured in the latest IBD Stock Analysis column.
The green price bars showing outperformance vs. SPX since October.
IBD told their readers, “Lithia carved out this cup-with-handle base. And the low in that pattern (Point 2) undercut the low in the previous base. So that reset the base count and makes this Base No. 1 in the count. The stock’s price fell about 20% as it carved out the handle. Ideally, the price drop should be just 8% to 12% as the handle forms. Still, that deep handle is not all that unusual in a bear market. Also, volume dried up near the lows as the handle formed. That’s a plus because it shows big investors weren’t dumping shares.To find the ideal buy point on a cup-with-handle base, add 10 cents to the peak in the handle. That makes the potential buy point 23.33.”