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CarMax (KMX) Crossed Above the 20-Day Moving Average: What That Means for Investors

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CarMax (KMX) reached a significant support level, and could be a good pick for investors from a technical perspective. Recently, KMX broke through the 20-day moving average, which suggests a short-term bullish trend.

A well-liked tool among traders, the 20-day simple moving average offers a look back at a stock's price over a 20-day period. This is very beneficial to short-term traders, as it smooths out short-term price trends and gives more trend reversal signals than longer-term moving averages.

Similar to other SMAs, if a stock's price moves above the 20-day, the trend is considered positive, while price falling below the moving average can signal a downward trend.

Moving Average Chart for KMX
Moving Average Chart for KMX

Over the past four weeks, KMX has gained 14.4%. The company is currently ranked a Zacks Rank #1 (Strong Buy), another strong indication the stock could move even higher.

The bullish case only gets stronger once investors take into account KMX's positive earnings estimate revisions. There have been 5 revisions higher for the current fiscal year compared to none lower, and the consensus estimate has moved up as well.

Given this move in earnings estimate revisions and the positive technical factor, investors may want to keep their eye on KMX for more gains in the near future.


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