Better the car than the stock

Published October 3, 2014

Many of the car stocks are technically negative, so if you need money for a new car, investing in car stocks may not be the way to go. This week we have a closer look at five car stocks. Daimler, best known for the Mercedes-Benz, stands out.

Daimler (DAI)

The Daimler stock has just broken downwards through the rising trend, which indicates a weaker rate of increase or more horizontal development. However, the price is near support at 59 euros, which opens for a reaction upwards. The stock broke downwards through support in a rectangle formation this summer, and even though the price target of 61.40 is reached, the formation signals continued negative development. In addition the stock is weakened by poor price/volume correlation. The fact that it is near support and in a rising trend, makes Daimler a weak positive candidate.

Investtech considers Daimler a technically weak positive candidate in the medium term.

Tesla Motors (TSLA)

The price of Nasdaq listed Tesla has reacted downwards through support at 258 dollars. Further fall is indicated, and at reactions upwards there is now resistance at this level. In addition the rising trend is broken, and negative volume balance weakens the stock further in the short term. In the case of continued negative development, there is support at 186 dollars.

The broken trend, the fact that it is close to resistance, and the negative volume balance all make it more likely that the price will fall than rise in the next few months. Nevertheless, it will be a buy signal if the price breaks above 258 dollars.

Investtech considers Tesla Motors a technically weak negative candidate in the medium term.

BWM (BMW)

The BMW stock has broken the rising trend. The stock has also triggered a sell signal from a head and shoulders formation, and further fall to 78 euros or less is indicated. Poor correlation between price tops and volume tops and between price bottoms and volume bottoms further weaken the stock. The price is approaching support at 83.40 euro, however. This can give a reaction upwards, whereas a break downwards through this level will weaken the stock further.

Investtech considers BMW a technically weak negative candidate in the medium term.

Toyota Motor Corp (TM)

New York listed Toyota Motor Corp shows a falling trend, and continued negative development is indicated. The stock is also weakened by negative volume balance. The stock is traded more on days with falling prices than on days with rising prices. This shows that when sellers wish to sell, they will rather sell at low prices than wait until the buyers will pay more. There is good support at 114 dollars, while there is resistance at 120 dollars. Break through one of these levels will signal further development in the same direction.

Investtech considers Toyota Motor Corp a technically negative candidate in the medium term.

Porsche Automobil Holding (PAH3)

Porsche Automobil Holding shows weak development in a falling trend channel, and continued fall is indicated. The negative trend is supported by poor correlation between volume tops and price tops and between volume bottoms and price bottoms. The stock is approaching support at 61.50 euros, which can give a reaction up, but the negative volume balance weakens the stock in the short term and increases the chance of a break downwards through support.

Investtech considers Porsche Automobil Holding a technically negative candidate in the medium term.

The analyses are based on closing prices from Wednesday October 1st and are written for publication in Børsen.dk.