Unloved Auto Stocks Fueling Up Again
06/23/2011 8:00 am EST
Fearful sellers left the auto industry in their dust, but the charts for the three largest automakers show that these stocks may be gearing up for a summertime drive higher.
I have a nice car. A Mercedes-Benz CLK convertible. Sweet, right? Actually, I should say it used to be a nice car, in 2000 when I bought it. I also have a Nissan Armada that is six years old. My in-laws have four cars that are all ten years old or more, the crown jewel being a Chevrolet Suburban that has over 175,000 miles. My parents’ two cars were new in 1998.
I see new cars on the road, but I really do not know anyone that has bought a new car. Additionally, I get phone calls from the local Mercedes dealer telling me that they have the need for more year-2000 convertibles due to demand for used cars. What?
Someone specifically wants to by my 11-year-old car? So no one is buying new cars, and there is increasing demand for used cars. With this backdrop, why are all the car stocks looking ready to move higher? It must be that Oprah is in the market again. Let’s take a look.
Here’s Ford Motor Co. (F):
Ford Motor Co. (F) is rising off of a bottom at $12.80 this week. Its relative strength index (RSI) is now turning higher, and the moving average convergence divergence (MACD) indicator is improving towards a positive cross. Once over $13.50, it can run to the previous support and resistance at $14.55 with the $16.50 resistance above that.
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Here’s General Motors (GM):
General Motors (GM) is also rising out of a base from last week. The MACD has crossed positive, and the RSI is rising, looking to challenge the mid-line. If it continues to hold over $29.50, look for it to test resistance at $30.20 and then $30.65 before a run to $31.80.
And finally, Toyota Motor Corp. (TM):
Toyota Motor Corp (TM) is moving up from the base as well, with a MACD that is crossing positive and an RSI that is rising to test the mid-line. It is approaching the mid-line of the Bollinger bands at $80.88, and above that, the stock has resistance at $82.50 and then $84 before it can run higher.
It might be time for me to buy a new car…and some stock too!
By Greg Harmon of Dragonfly Capital