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Why Auto Stocks Began 2018 on a Bullish Note

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Jan. 16 2018, Published 3:10 p.m. ET

Auto stocks

During the week ended January 12, the broader market remained positive, and the S&P 500 benchmark (SPY) (SPX-INDEX) witnessed a rise of 1.6%. Meanwhile, the stocks of auto companies like Fiat Chrysler (FCAU), Tesla (TSLA), and Ferrari (RACE) largely outperformed the broader market. FCAU, Tesla, and Ferrari rose 7.4%, 6.2%, and 5.1%, respectively, last week. Mainstream US automakers (IYK) GM (GM) and Ford (F) ended the week with minor gains of 0.1% and 0.2%, respectively.

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2018 began on a bullish note

As of January 12, US automakers GM and Ford were trading in the positive territory on a YTD (year-to-date) basis with 7.5% and 5.9% gains, respectively. Similarly, other auto stocks like Fiat Chrysler, Tesla, and Ferrari have gone up by about 31.1%, 8.0%, and 12.4% YTD, respectively. By comparison, the S&P 500 benchmark has gone up by 4.2% in 2018 so far.

Legacy auto companies like GM, Ford, and FCAU reported a YoY (year-over-year) drop in their 2017 US sales. Despite total sales weakness, automakers continued to benefit from higher US demand for utility vehicles and trucks last year, which could be the primary reason for optimism among auto investors.

According to the data compiled by Autodata, total US light vehicle sales fell 1.8% YoY to 17.2 million in 2017, while US light truck sales inched up by 4.3% YoY.

Series preview

In this series, we’ll find out how auto stocks traded in the last couple of weeks. We’ll also see what important updates came in from the auto industry in the last few weeks. Plus, we’ll explore some key technical levels for the stocks of these auto companies.

We’ll begin by looking at GM’s recent stock price movement.

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