Is Sonic Automotive Closing in to Support?

Published on Thursday, 24 May 2012 07:48 Written by TradersHuddle Wire

New York, May 24th (TradersHuddle.com) - Shares of Sonic Automotive, Inc. (NYSE:SAH) ended the trading session close to calculated support at $14.48, a level that will raise the attention of traders looking for an entry point.

Sonic's stock range is defined by its calculated support defined at $14.48 and by the resistance level at $15.42. This range could be used as a reference by traders planning their next move. The area where buyer interest might materialize is defined as calculated support. Stocks trading near support might see upside if it can successfully hold the technical level. However, this area if breached will signal participants that the stock failed to entice buyers to step in to support it.

Traders wanting to establish a position should pay close attention to Sonic's price action, and establish it as close to support as possible, but only after buying materializes. Traders should understand that the resistance point at $15.42 might limit their upside, however, if the stock breaks resistance, it could be a good point to add to the position.

Shares of Sonic Automotive, Inc. closed at $15.19 in the prior trading session.

Sonic Automotive, Inc. (NYSE:SAH) is one of the largest U.S. automotive retailers. The Company operates dealers and collision repair centers in the metropolitan southeastern, midwestern, and southwestern United States. The Company sells new and used cars and light trucks as well as replacement parts.