In week 38, Harley-Davidson stock (HOG) rose 2.4%, outperforming the broader market. Last week, the S&P 500 rose 0.8%, while peers (XLY) General Motors (GM), Ford (F), and Fiat Chrysler (FCAU) rose 2.0%, 4.2%, and 4.5%, respectively. As of September 24, the company’s stock was hovering in the positive territory on a quarter-to-date basis with 6.2% gains after falling in the first two quarters of 2018.
Key technical levels
Despite 6.2% gains in HOG stock in the third quarter so far, its price trend is still reflecting weakness, as it’s yet to violate an important resistance near $46.00. The 14-day RSI (relative strength index) was not far away from the line of equilibrium at 56.9, reflecting a mixed bias in the momentum. On the downside, $43.30 should act as a key support level this week.
On September 12, Trump targeted HOG again in a tweet saying that “Many @harleydavidson owners plan to boycott the company if manufacturing moves overseas. Great! Most other companies are coming in our direction, including Harley competitors. A really bad move! U.S. will soon have a level playing field, or better.”
At the end of the second quarter, Harley-Davidson stated that “EU tariffs on Harley-Davidson motorcycles exported from the U.S. have increased from 6% to 31%.” The company added, “these tariffs will result in an incremental cost of approximately $2,200 per average motorcycle exported from the U.S. to the EU.” If the company passes on this extra cost burden to its consumers, its already weakening European sales could weaken further.
To avoid high tariffs, the company decided to shift the production of motorcycles made for the European market from US factories to international factories. This move didn’t please Donald Trump, who warned HOG on Twitter that if it were to move production overseas, it “will be taxed like never before!”