I created an article over on Commodities Countdown blog (please connect if you are interested by subscribing at the bottom of any article as it does not currently appear on the blogs page) about the car business charts globally. Is The Auto Business Blowing Black Smoke Because Of The Emissions Crisis? I would encourage you to read that. However, I wanted to examine Magna, Martinrea and Linamar for Canadian investors. Also, I will be doing a commodities-focused webinar this afternoon where I will dip my toe in on this area of the market. (Commodities Countdown 20150924).
Magna (MG.TO) or MGA in USA has been a wonderful growth story and the stock launched a few years ago. Luckily, we had an article right here on this page explaining how good things were going to get. Magna Looks Magnificent (20121220). That came a week after the big bold headline of a new bull market. 2012 12 12 Announcing The Global Bull Market. I didn't trade that as well as I should have!
If you read the Magna article, you'll have seen the setup. Here is the updated chart. I made a reference to my friend Tom McClellan, who suggested never look for a top when you're staring at the base. This is a pretty good example of why!
But that is not why we are writing this article. Now that I have shown that I can be bullish, lately I've been bearish. I am writing this article to suggest it is quitting time on the auto sector. It was time before the emissions debacle showed up. Here is Magna in my current weekly chart style.
All four times the MACD on Magna has gone negative, it was a good time to leave the party. We have back tested the 40 WMA from below and kept going lower. We are about to get a 10/40 WMA cross as shown in the zoom panel.
Looking at Martinrea Intl (MRE.TO) the chart looks broken as well. This one is as bouncy as a basketball in the NBA. Look how nice it is supported or blocked by the 10 WMA in blue.
Here is a close up of that 10 WMA buy or sell idea. Currently a sell signal is present. Especially with the charts shown on the Commodities Countdown Blog today.
Lastly is Linamar (LNR.TO). Linamar looks like Magna. Beautiful chart, but it's time to exit this party. Trend line break, 10/40 WMA cross, trading below 40 WMA, negative MACD.
So, through the charts it looks like an important time to exit the auto sector. The reality was the signal on almost every chart was a couple of months ago and this week is confirming the direction.
Join my webinar today for more on what is going on in the markets. You can register here (Commodities Countdown 20150924). Next Tuesday is the Canadian Technician webinar with all things Canadian! Watch the home page for the link and we'll see you at the webinar today.
Good trading,
Greg Schnell, CMT
