Today’s three big stock charts look at the good, the OK and the ugly within the auto manufacturers. Tesla Inc (NASDAQ:TSLA), General Motors Company (NYSE:GM) and Ford Motor Company (NYSE:F) all have charts that are showing signs of different opportunities that traders may want to act on over the next few weeks.
Tesla Inc (TSLA)
First the good. Tesla shares are trading 68% higher year-to-date as the company continues to convince the market that they will indeed be able to meet demand as well as continue developing cutting-edge automobiles that will lead in a market that is beginning to grow quickly.
While we consider TSLA shares a long-term buy, there are a few things that the bears should be eyeing right now as a short-term correction in the price may be on the way.
- From a long-term perspective, Tesla shares are more overbought than they’ve ever been. This is due to the incredibly strong performance over the last six months. Now, we always say that overbought can become more overbought, but in this case, a short-term decline would be helpful in allowing TSLA stock to move higher.
- In addition to the long-term overbought conditions, Tesla shares are overbought from a short-term perspective. Currently, the RSI is above 80, which historically has seen the stock either enter a corrective phase or an extended consolidation.
- A pullback in Tesla stock would open-up for a buying opportunity if they reached down to the $310-level as this is where the stock’s 50-day moving average is residing, ready to bolster the technical buying.
General Motors Company (GM)
The “OK” within the auto companies right now is represented by General Motors. Recently, the stock started showing signs that investors and traders may be nibbling at them as a value proposition. Here are a few indications of that:
- GM shares are currently trading above their 50-day moving average. This trendline is also transitioning into a potentially bullish pattern as it is beginning to ascend. This will add technical strength to the shares’ outlook.
- The rising 50-day moving average is also setting-up General Motors shares for a potential “Golden Cross”. This ocurrs when the 50-day crosses above the 200-day and is a bullish signal for the intermediate-term outlook for a stock.
- The move back above $34 will move GM shares back into a technical bull market trend, attracting long-term technical buyers into the mix.
Given the technical backdrop, General Motors shares look able to make a run at the $36-level.
Ford Motor Company (F)
Now the bad, Ford Motor Company.
Unlike GM shares, F is marred in a short- and intermediate-term bearish trend that is not opening opportunities for the bulls.
- Ford shares currently trade well below their 50-day moving average, which is also trendling lower. This is indicative of an intermediate-term bearish technical outlook.
- In addition, F shares have their 200-day moving average hovering overhead along with the 100-day moving average. Both of these trendlines are also in a bearish formation. In other words, rallies in Ford stock are likely to be met with traders that will be selling into the pressure.
- F shares trade below their longer-term 20-month, putting them in a bear market trend that is not likely to be broken anytime soon. Overhead resistance resides at $11.60 from this trendline.
Based on the technical picture, traders may want to wait before adding positions to Tesla, GM looks like a fair buying opportunity and Ford shares remain the stock to avoid in the group.
As of this writing, Johnson Research Group did not hold a position in any of the aforementioned securities.
