Car rental company Dollar Thrifty (NYSE:DTG) was in the news yesterday as Avis (NYSE:CAR) dropped its bid to acquire the company due to current market conditions. This leaves Hertz (NYSE:HTZ) as the only bidder. The stocks of the two potential bidders surged yesterday while the stock price of Dollar Thrifty (NYSE:DTG) traded fairly flat on the day.
What caught my attention was the clear trend on the weekly chart coupled by the ‘wedge’ on the daily chart. The weekly chart shows the sturdy up-trend from the 2009 is still in place, albeit a little steep. The stock has however corrected nicely off the June highs and currently sits right at the up-trend line.
The daily chart is where the real juice sits. Dollar Thrifty (NYSE:DTG) currently trades right between its 50 and 200 day simple moving averages (200 SMA is the lower blue line). Also and more importantly note the tight wedge pattern (white lines). The stock price is essentially wedged between two significant moving averages and near-term trend lines. A solid daily close above $66.50 could serve as a solid entry point for a long-side try. Stops could be placed at $64 with a first profit target near $71. Alternatively, a solid daily close below $61 could setup well for a short-side try. The short may be trickier to trade however as long as the 200 day simple moving average acts as support.