Not Just Any Car Stocks
- Posted by Greg Harmon
- on February 6th, 2014
Automobile stocks are still the place to be, just not the ones you think. Ford, $F and General Motors, $GM, still have a lot of ugliness in their charts. So turn your sights to a different perspective on them. The makers of automotive systems are looking great. Below is a look at two of them, BorgWarner, $BWA and Magna International, $MGA.
BorgWarner, $BWA has had a wonderful trend higher that was spoiled recently by a pullback in a channel. It is now testing the top of that channel though and has some great indicator readings to support a break higher. The Relative Strength Index (RSI) is moving up and making a higher high as the MACD is starting to curl higher and prepare for a bullish cross. Finally the accumulation/distribution statistic shows that there were buyer all through the pullback and they are getting more aggressive. A move over the channel at 53.75 triggers a long entry.
Magna International, $MGA, is similar. It had a pullback in a rounded bottom through December and then again recently in a channel. Thursday it broke the channel higher though. It has the same characteristics as BorgWarner from the technical indicators. The RSI is moving higher, the MACD is level and ready to turn higher, and the Accumulation/distribution statistic is making new highs. This is ripe for a trade or more against a stop at about 81.50.
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Gregory W. Harmon CMT, CFA, has traded since 1986 and held senior positions including Head of Global Trading, Head of Product Development, Head of Strategy and Director of Equity. (More)
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