KMX: Post-Earnings Breakaway Gap — Fade the Bounce into 46.1–46.6, Eyes on 43s

Comprehensive multi-technique analysis for KMX (CarMax Inc) as of 2025-09-26 close (44.86)

1. Market structure and price action

• Regime shift: A breakaway gap down on 2025-09-25 (close prior day ~57.05 → gap open 45.02; intraday low 42.75) on 10x+ average volume (28.5M vs typical ~2–4M). This is a classic post-earnings breakdown. Breakaway gaps tend to remain open for weeks and often see continued directional drift.
• Day-2 behavior (2025-09-26): Inside day relative to 9/25 (high 46.59 < 46.66, low 44.56 > 42.75), closing 44.86 near the session lower half after fading a mid-day rally. Inside days after a breakaway gap commonly precede continuation moves; the break direction of the inside-day range (44.56–46.59) sets the next impulse.
• Immediate S/R map from observed order flow: • Resistance: 46.00–46.24 (intraday supply and R1 pivot), 46.59 (day high), 47.37 (R2), 48.14 (R3/38.2% retrace zone start) • Support: 44.56 (inside-day low), 44.08 (S1 pivot), 43.31 (S2), 42.75 (gap day low), 42.05 (S3)
• Gap-fill context: The unfilled overhead gap spans ~45.02 to ~56.55 (9/24 low). Given the magnitude and volume signature, near-term full gap fills are statistically rare; partial fills into 47–49 (38.2–50% of the drop) are possible on relief bounces.

2. Volume, VWAP, and distribution

• 9/25: Climax volume suggests institutional distribution and a reset of value lower.
• 9/26: Volume still elevated (~9.6M), with late-day trade below session VWAP (approx mid-45s) indicating sellers defended rallies. Closing beneath VWAP is evidence of persistent supply.
• OBV/Accum-Distribution (qualitative): Sharp downtick consistent with distribution, not accumulation.

3. Trend diagnostics (multi-timeframe)

• Moving averages: Price now far below the 20/50-DMA (both clustered ~high-50s/low-60s) and below the 200-DMA (likely mid-60s). This is decisively bearish and signals trend acceleration down.
• ADX: Trend strength expanding post-gap. Even without exact calculation, the character of the move (gap+range expansion) implies ADX rising into/above trend-confirming territory.
• Regression channel (20–30 sessions): Strong negative slope since early September; Friday’s action remains pinned near the lower channel, signaling extension but not yet exhaustive reversal.

4. Momentum and mean-reversion setup

• RSI(14) approximation: ~15 (very oversold). Calculation using last 14 changes yields average gain ~0.26 vs average loss ~1.44; RSI ≈ 15. This strongly favors a reflexive bounce but within a primary downtrend.
• Stochastics (qualitative): Deeply oversold (~10% of 14-period range), consistent with RSI.
• MACD: Well below zero and signal line; histogram extremely negative but beginning to compress on the inside day—often a precursor to a short, tradable bounce within a bearish phase.
• Bollinger Bands (20,2): Price closed outside/at the lower band for two sessions; band width expanded. Tactically, odds of a reversion-to-band mean a bounce toward mid/upper 45s–46s is plausible before sellers reassert.

5. Volatility and pivots

• ATR(14): Expanded sharply post-gap (range 42.75–46.66 on 9/25; 44.56–46.59 on 9/26). Expect continued elevated intraday swings (2–3+ points) next session.
• Classic floor pivots based on 9/26 (H 46.59, L 44.56, C 44.86): • Pivot P ≈ 45.34; R1 ≈ 46.11; S1 ≈ 44.08; R2 ≈ 47.37; S2 ≈ 43.31; R3 ≈ 48.14; S3 ≈ 42.05. These align tightly with observed supply/demand turns and provide high-probability fade zones.

6. Ichimoku lens (qualitative)

• Price far below cloud, with conversion and baseline well overhead; lagging span beneath price and cloud. State: fully bearish. The distance from Tenkan/Kijun is stretched, encouraging a snap-back rally into resistance that typically gets sold.

7. Fibonacci levels from the gap impulse

• Move measured: 57.05 (9/24 close) → 42.75 (9/25 low) = 14.30 points. • 38.2% retrace ≈ 48.22 • 50% ≈ 49.90 • 61.8% ≈ 51.67
• Near-term relief rallies into 46.6–48.2 would remain corrective within a dominant downtrend; 48.2 lines up with R3 and the lower edge of the gap’s partial-fill zone.

8. Pattern synthesis

• 9/25 print: Long lower wick and close near open—a hammer-like attempt but not confirmed.
• 9/26: Inside day with weak close—the hammer was not confirmed; instead, supply capped 46–46.6.
• Post-earnings drift: Statistically biased to the downside in subsequent sessions for negative surprises; bounces often get faded until a clear higher low forms.

9. Intraday tape (26th) and Monday triggers

• Buyers pushed to 46.24/46.59 but failed at R1/Rally highs; sellers regained control into the close.
• Breakout/breakdown triggers from the inside day: • Above 46.59 → room to 47.37 and possibly 48.14 (fade zone) • Below 44.56 → tests S1 44.08 then S2 43.31; undercut of 42.75 possible if momentum builds.

10. Scenario analysis for the next 24 hours (next trading session)

• Base case (probability-weighted): Early relief bounce into 46.0–46.6 (R1/overhead supply) followed by a fade back toward 44.0–44.5 as sellers defend the breakdown. Net: slightly negative to flat close vs today, with intraday high near 46.3–46.8 and lows probing 43.6–44.2.
• Bear case (continuation): Failure near open, swift break of 44.56 → 44.08 → 43.31, with risk of a stop-run toward 42.75 (prior low).
• Bull case (less likely near-term): Gap-up through 46.6 and sustained acceptance above 46.6–47.0 leading to a squeeze toward 47.4–48.1. Expected to stall below ~48.2 (Fib 38.2%/R3) on first test.

11. Trade thesis and execution logic

• Strategic bias: Primary trend is down; momentum is oversold, which argues for tactical bounces that are opportunities to sell strength rather than chase weakness at the lows.
• Confluence short entry zone: 46.1–46.6 (R1, intraday supply, VWAP rejection area, prior failure). Optimal entry: 46.15 (limit short), giving favorable R:R toward S2/S3.
• Profit target: 43.30 (S2 pivot), where responsive buyers are likely to show, with scope to trail if momentum accelerates to 42.75.
• Risk context (not an order, but capital management guidance): A protective stop would logically sit above 47.40 (R2) to avoid getting trapped in a short squeeze toward 48.1. This yields roughly 1.25–1.3:1 to S2, improving to >2:1 if 42.75 is probed.

Bottom line prediction (24h): Expect a reflexive bounce into 46.0–46.6 that stalls, followed by renewed selling pressure. Probability favors a lower-low attempt on the inside-day range with downside magnet near 43.3 and potential undercut of 42.75. Therefore, the higher-odds tactical trade is to Sell (short) a pop into resistance.