Knowing when to take wins is essential to trading success. When we first Carvana (CVNA) as an opportunity on June 13, it traded at $23.51. It’s now up to $45.62, and finding heavy resistance dating back to August 2022. It’s also over-extended on RSI, MACD, and Williams’ %R. All of these are telling us to exit the CVNA trade at the moment.  We can always jump back in on pullbacks, but it’s important to pay attention to what’s happening technically here.

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Analysts at RBC Capital Markets also just downgraded the CVNA stock to an underperform rating. Granted, the car company posted better Q2 results and debt restructuring. Unfortunately, that wasn’t enough for the analyst. Now, as quoted by Seeking Alpha, RBC Capital analysts believe, “LT margin improvements are now likely well/ overly-appreciated, a faster (potentially margin-stalling) return to growth is likely necessary to cover debt costs and significant dilution & expanding debt load post-restructure are likely coming.”

Short-term, traders may want to take wins on the stock, and perhaps, buy in the money August put to profit from the potential downside.  Once the negativity has passed, we can always reassess and jump back into the long side.


Ian Cooper