Forget about Goldman’s downgrade of TSLA today. Shares of ORLY are getting bludgeoned this morning, after the company said same store comps for June were +1.7% vs guidance of +3-5%.
The subsequent result of such a shortfall is sending shockwaves throughout the industry.
Both auto parts stores and dealerships are getting killed.
Why is this important?
Autos have been weak all year long. Many skeptics believe the weakness in the auto sector is indicative of an economy about to head down into recession. The health of the automobile sector, and the trannies overall, are often considered leading economic indicators.
Thus far, there’s been very little spillover into the trannies — as represented by its main ETF, IYT. I’d keep an eye on IYT, in particular FDX and the rails, to see if the weakness in the autos, in fact, begins to spillover. If it does, the market will assuredly respond negatively.
Here are the holdings for IYT.
The Auto Sector Gets Hammered, and rightfully so…based purely on fundamentals.