In his Real Money column "Now There's a Bull Market in Anything Auto," Jim Cramer told readers how the auto industry is once again becoming a good neighborhood, as your car is proving to be one of the safest ways to travel in a world with masks and social distancing. Cramer said there are a number of ways to play the bull market in autos. In auto parts, he likes Axalta Coating Systems (AXTA) and Adient plc (ADNT) .
Let's check out the charts of these two stocks.
Axalta
In the daily bar chart of AXTA, below, we can see that the shares were cut in half from February into the middle of March. AXTA has since recovered but is still below the congestion area from November to February in the $20-$31 area. Prices are in an uptrend above the rising 50-day moving average line but the slope of the 200-day moving average line remains negative.
The On-Balance-Volume (OBV) bottomed in late March and has made a new high for the move up this month. A rising OBV line is a positive clue telling us that buyers of AXTA are more aggressive than sellers.
The trend-following Moving Average Convergence Divergence (MACD) oscillator is above the zero line but the two moving averages that make up this indicator are very close and could turn up or down in the days ahead.
In the weekly bar chart of AXTA, below, we can see a considerable amount of potential resistance in the $28-$32 area. Prices are pointed up but the slope of the 40-week moving average line is bearish.
The OBV line has improved but a move above the highs of last year hasn't happened yet. This kind of strength in the OBV line would give me confidence that the resistance could be broken but it has not happened yet.
The MACD oscillator finally crossed the zero line this month for a buy signal.
In this daily Point and Figure chart of AXTA, below, we can see that prices have reached an upside price target of $25.50.
Adient
In the daily bar chart of ADNT, below, we can see that the shares have broken above their June highs. ADNT is in an uptrend above the rising 50-day moving average line. The 200-day line is bottoming and we see that the 50-day line has crossed above the 200-day line for a bullish golden cross.
The OBV line shows a bullish rise from the middle of March and confirms the price advance. The MACD oscillator is bullish.
In the weekly bar chart of ADNT, below, we can see that the shares have been bottoming since early 2019. A weekly close above $30 will be an important upside breakout. The 40-week moving average line is beginning to turn upwards and the OBV line is quietly positive.
The MACD oscillator has just crossed the zero line for an outright buy signal.
In this daily Point and Figure chart of ADNT, below, we can see a recent upside breakout and a potential price target in the $37 area.
Bottom-Line Strategy
Comparing the charts and indicators of these two companies I would recommend that traders and investors consider the long side of ADNT here and put AXTA on a possible shopping list. Go long ADNT risking a close below $20.
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