Sunday, December 11, 2016
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Autos Immune to Bearish Disease

We know that the major averages corrected to the tune of 9-12% from mid-September through mid-November. In that time, we heard plenty of calls for a fresh bear market and likely economic recession. There is still the issue of whether the recent correction lows are indeed good lows. How the market continues to react to the recent rally should give clues. Thus far, it was been more backing and filling than anything else.

Since mid-September, though, one inescapable fact has been the bullish divergence by the auto stocks. On the daily charts of Ford and General Motors, below, consider the clear pattern of higher highs and higher lows by these highly economically-sensitive stocks even as the indices corrected roughly 10%.

If the auto stocks are any indication, the recession and bear are not yet here.

Also watch in the auto sector: CPRT KMX TM TSLA 



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  1. metalleg

    Maybe some people knew hurricane Sandy was coming to destroy everyone’s car on the east coast.

    Autos will be a good short soon.

  2. The Real Muppet

    They were an excellent short yesterday and earlier this morning. GM just broke Chess’s trendline. Good Post though and I think this bullish thesis will prove right… eventually.