Oil prices and interest rates: concerns about these 2 key factors are leading investors to dump shares in the transportation companies that depend on them for profitability.
It’s not that the price of petroleum has skyrocketed — it’s the huge potential for that given all of the unresolved trouble in the Middle East these days.
“Tentative agreement” with the UAW should be helping the carmakers but it may have been priced in already judging from the lack of price excitement.
Also, the Fed has not raised rates this week, but the Treasury market is the tell: fixed income investors are waiting for even higher yields as the long bond now offers above 5% — signaling a belief among market participants that higher rates may be ahead.
It’s not the kind of economic scenario that car buyers or air travelers would find all that encouraging. Sensing this, Wall Street types are reconsidering former purchases of stocks that represent transportation.
Ford, General Motors
GM
LUV
GM
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The Ford daily price chart is here:
The red-dotted line represents the level at which the stock found previous support in mid-March. That it’s gapped down below that and has now closed for 2 days underneath it is a bearish look. The relative strength index (RSI, below the price chart) has reached an “oversold” reading.
Note that the 50-day moving average (the blue line) has crossed below the 200-day moving average, another negative for shareholders.
The weekly price chart for Ford is here:
From a high of $23 in early 2022 to the current $9.77 — that’s a drop of 57%, a remarkable falling off in a short time for such a well-known American brand name. Ford is now below both its 50-week and its 200-week moving averages.
The General Motors daily price chart looks like this:
It fell below the May support level in early October, briefly attempted a rebound and now trades steadily lower. Although the RSI suggests “oversold,” it’s not confirmed by the 50 and 200-day moving averages, both of which continue downward.
GM’s weekly price chart looks like this:
You can see the drop below the previous support level of $30 from June/July, 2022, an indication of buyers giving up. This is also apparent in the direction of the down trending 50-week moving average and the inability of the 200-week moving average to track upward again.
Here’s the daily price chart for Southwest Airlines:
The stock peaked in July at just above $39 and now goes for $22.51, a 4-month drop of 42%. In September, it slid beneath the May support level of $28 and continued down. Both the 50-day and the 200-day moving averages trend downward. The RSI suggests “way oversold.”
Here’s the weekly price chart for Southwest Airlines:
The red circle indicates the spot where the 50-week moving average crossed below the 200-week moving average. With a few rallies attempted, the stock has continued to fall since then with the relative strength index finally at an “oversold” reading.
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