Katie Stockton says chart shows car stock a contrarian buying opportunity | Wilnesh News
European auto stocks have been hammered over the past eight months, with the STOXX Europe 600 Auto & Parts Index down about 29% since peaking in April. Many of Europe’s major automakers, such as Mercedes, BMW, Volkswagen and Stellantis, are heavily oversold and have nearby support on their charts. This provides compelling risk/reward opportunities in this space. The common setup in our indicator is reflected in the weekly bar chart of the STOXX Europe 600 Automobiles & Parts, which generated a counter-trend “buy” signal from the DeMARK indicator for the first time since late 2018. It shows that European auto stocks may experience a medium-term counter-trend rise. Monday’s news-driven sell-off in Stellantis NV ( STLAM IM ) drew our attention to its chart, which showed the stock closing at key support at the 2022 low (€11.15). A new counter-trend “buy” signal has emerged on the monthly bar chart, raising the possibility that a test of support holds and gives way to an easing rebound that could last for several months. A timely opposing “sell” signal from the same model marked this year’s peak. STLAM IM has recently seen its weekly MACD switch to a ‘Buy’ signal, indicating a significant loss of downward momentum from a medium-term perspective. There are also active counter-trend “buy” signals on the weekly chart, which increases the likelihood that today’s downward gap has completely disappeared. If STLAM IM can rebound quickly and clear initial resistance at its 10-week moving average (near €12.35), we will be more confident that a significant low is in place. Compared to the STALM IM, the more popular Ferrari NV (RACE IM) has a long-term upward trend and significantly outperforms the STOXX Europe 600 Automobiles & Parts Index. However, its uptrend is set to undergo a prolonged consolidation phase, according to the DeMARK indicator and monthly stochastics, which are turning lower from overbought territory. The monthly MACD bar chart has been trending lower for several consecutive months, showing that the momentum behind the uptrend is fading. This setup suggests that laggards in the industry, such as STLAM IM, may have a phase of outperformance, while RACE IM corrects and relinquishes its leadership position. —Katie Stockton and Will Tamplin Get free access to Fairlead Strategies research here. Disclosure: All opinions expressed by CNBC Pro contributors are theirs alone and do not reflect the views of CNBC, NBC UNIVERSAL, its parent company or affiliates, and may have been previously published by them on television, radio, online or other media spread on. The above is subject to our Terms and Conditions and Privacy Policy. This content is for informational purposes only and does not constitute financial, investment, tax or legal advice or a recommendation to purchase any security or other financial asset. The content is general in nature and does not reflect any individual’s unique personal circumstances. The above may not apply to your particular situation. Before making any financial decisions, you should strongly consider seeking advice from your own financial or investment advisor. Click here to view the complete disclaimer. Fairlead Strategies Disclaimer: This communication has been prepared by Fairlead Strategies LLC (“Fairlead Strategies”) for informational purposes only. This material is for illustration and discussion purposes only and is not intended to be relied upon or construed as financial, legal, tax or investment advice. You should consult appropriate advisors regarding such matters. This material is provided as of the date indicated, reflects the author’s current expectations, and is subject to revision by the author, without the author’s obligation to do so. This material may contain commentary on broad indices, market conditions, different types of securities and cryptocurrencies, using the discipline of technical analysis to assess demand and supply based on market pricing. The views expressed in this article are solely those of the author. This material should not be construed as a recommendation, advice, offer or solicitation for the purchase or sale of any investment. This information is not intended to provide a basis for making an investment decision with respect to any specific security or its issuer. This document is for use by CNBC Pro subscribers only and may not be distributed to the public. Certain information is provided by and/or based on third party sources and, while such information is believed to be reliable, no representation is made as to the accuracy, completeness or timeliness of such information. This information is subject to change at any time without prior notice. Fairlead Strategies assumes no obligation to maintain or update this material in light of subsequent information and events, or to provide you with any additional or supplementary information or to make any updates or corrections to the information contained herein. Fairlead Strategies, its officers, employees, affiliates and partners are not responsible in any way for any loss, expense or claim caused by any person’s reliance on this material. Nothing contained herein is or should be construed as a promise or representation of future performance. Past performance is not indicative of future results. The opinions expressed in this material may differ from or be contrary to the opinions expressed or actions taken by Fairlead Strategies or its affiliates or their respective officers, directors or employees. Additionally, any opinions and assumptions expressed herein are made as of the date of this release and are subject to change and/or withdrawal without notice. Fairlead Strategies or its affiliates may have positions in the financial instruments described above, may obtain such positions at prices that are no longer available, and may have interests that are different or adverse to your interests or that are inconsistent with the advice contained herein. Any investment will be made on the same terms as unaffiliated investors and does not constitute a controlling interest. Fairlead Strategies, its officers, employees, affiliates or partners disclaim all liability for any damages that may arise from the use of the information contained in this article. Any financial instruments mentioned herein are speculative in nature and may involve principal and interest risks. Any prices or levels shown are historical or purely indicative. This material does not take into account the specific investment objectives or financial situation, objectives or needs of any particular investor and is not intended to constitute a recommendation for a particular client regarding specific securities, investment products or other financial products or strategies. The securities, investment products, other financial products or strategies discussed in this article may not be suitable for all investors. Recipients of this information must make their own independent decisions regarding any securities, investment products or other financial products mentioned herein. The Materials should not be provided to any person in any jurisdiction where the provision or use of the Materials would be contrary to local laws, rules or regulations. This material may not be reproduced or redistributed without the written consent of Fairlead Strategies.
