One of the noteworthy developments in recent days has been the move in the automotive sector. The group has been under selling pressure in recent days after China said it was ready to retaliate with tariffs on around $60 billion of U.S. goods, just days after the U.S. administration revealed that Trump had spoken with U.S. Trade Representative Robert Lighthizer and asked him to consider increasing the proposed levies on $200 billion of Chinese goods up to 25 percent, from 10 percent. After a strong run of outperformance in 2017, the First Trust NASDAQ Global Auto Index Fund (CARZ) saw a sharp reversal in recent months, tumbled more than 10 percent YTD. Now the question is whether recent selloff is a pause that refreshes or it’s a beginning of something worse? Below is an update look at a trade in CARZ.
The graphic below is from our “U.S. Market Trading Map”, show the near-term technical bias and trading ranges. As shown, the underlying is in a short-term bullish trend when the price bars are painted in green. The underlying is in a short-term bearish trend when the price bars are painted in red.
Chart 1.1 – First Trust NASDAQ Global Auto Index Fund (daily)
Our “U.S. Market Trading Map” painted CARZ bars in red (sell) – see area ‘A’ in the chart. Over the past few days, CARZ has been basing sideways using the 50% Fibonacci retracement of the 2016-2018 upswing as support. In fact, recent trading actions represent an orderly low-level consolidation period in the aftermath of the late June’s massive reversal. This is a bearish development…Click here to read more.
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