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F, GM, and TSLA: What Do Automakers’ Moving Averages Reveal?

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Leading automakers like Ford (F), General Motors (GM), and Tesla (TSLA) face bleak business conditions. While Ford just faced a credit rating downgrade from Moody’s, General Motors faces labor troubles with its UAW strike. Also, Tesla faces competition from the Porsche Taycan in the electric vehicle market. In such a scenario, let’s analyze the stock performances and moving averages to determine the outlook.

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Automakers’ stock performance

Automaker stocks posted mixed performances in the third quarter. The stocks were impacted by their second-quarter earnings, volatile equity markets, and rising geopolitical risks. While General Motors and Ford stocks have fallen 3.0% and 10.4% in the third quarter, Tesla stock has increased 7.7%.

Ford stock has fallen the most among its peers. The company faces heat from all sides like a rating downgrade, trade-war disturbance, recession concerns, and a deal with California. Also, auto stocks were impacted by their recent earnings. While Ford and Tesla missed analysts’ earnings estimate, General Motors beat the estimate.

Automakers’ moving averages

Automaker stocks’ mixed performances impacted their 50-day moving averages in the third quarter. While Ford’s 50-day moving average fell, Tesla and General Motors’ 50-day moving averages rose in the quarter. Notably, Tesla stock crossed over its 50-day moving average, while Ford and General Motors stock broke below their 50-day moving averages. Usually, when a stock crosses over its 50-day moving average, it’s considered to be a technically positive sign and vice versa.

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Tesla stock is in the recovery zone

Tesla stock, which was 9.1% below its 50-day moving average at the end of August, is 2.4% above its 50-day moving average. There was a steeper rise of 7.7% in the stock compared to an increase of 5.6% in its 50-day moving average in the quarter. Tesla stock is also trading 36% above its 52-week low of $176.9.

Tesla is progressing well with its China Gigafactory 3, which will ramp up production by mid-2020. In the next year, analysts expect the company to post profits compared to a loss in the current year.

However, Tesla stock is trading 37% below its 52-week high of $379.5. The stock has lost around 28% year-to-date. Also, Tesla’s 50-day moving average trades 11.1% below its 200-day moving average.

So, Tesla stock has been recovering and showing positive short-term movements. However, the stock has significant ground to cover before its 50-day moving average crosses over its 200-day moving average—a technically bullish zone.

Weak Ford stock looks positive in the long term

Ford stock fell 10.4% in the quarter—steeper than a fall of 5.7% in its 50-day moving average. As a result, Ford stock fell below its 50-day moving average. The stock, which was 1.3% above its 50-day moving average at the beginning of the quarter, is 2.8% below its 50-day moving average. Also, the stock is trading 13% below the 52-week high of $10.6.

However, Ford stock has returned around 20% year-to-date—more than automakers General Motors or Tesla stocks. Also, the stock is trading 24% above its 52-week low of $7.4. Ford is in the midst of a restructuring exercise, which should start yielding results next year. The company will have a leaner cost structure, revamped product portfolio, and high return business segments.

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Ford’s 50-day moving average is 2.1% above its 200-day moving average. However, the 50-day moving average was 9.5% above its 200-day moving average at the beginning of the quarter. So, despite the narrowing gap between the moving averages, Ford’s 50-day moving average has continued to hold above its 200-day moving average, which is a good sign.

General Motors stock

General Motors stock, which was 4.5% above its 50-day moving average at the beginning of the quarter, is 3.2% below its 500-day moving average. The bleak situation was due to a 3.0% decline in the stock during the quarter. General Motors faces a tough time due to its employee strike, which has entered the second week. Notably, General Motors stock is trading 11% below its 52-week high of $41.9.

However, the stock has gained around 12% year-to-date. Also, General Motors’ 50-day moving average trades 2.5% above its 200-day moving average. So, although General Motors stock has been falling and showing negative short-term movements, its 50-day moving average continues to stay above its 200-day moving average, which is a favorable scenario.

Overall

Auto stocks like Ford and General Motors are showing weakness in the short term. However, their 50-day moving averages continue to hold above their 200-day moving averages, which is good news. Tesla stock seems to be recovering. However, the stock needs a good run for its 50-day moving average to cross over its 200-day moving average—the bullish zone.

To learn more, read Automakers’ Growth Outlook: F, TSLA, GM, FCAU, and RACE.

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