Three Charts That Make Me Think We’re In Something Entirely New

About a year ago, I detected a fundamental shift in a few names that I felt might give us clues as to where we’re going. I want to revisit that thought today.

What you saw in that tweet is a breakout that may signal a major shift in the economy as we’ve known it. Perhaps it is a shift in the nature of globalization brought on by the pandemic.

But, in each of these cases, these major US manufacturers all did something interesting. Their stocks have been in declines in some cases for decades but then that may have now all of sudden changed. It appears to me that they have all broken trend. Their trends have been down, and they have been so during the long period of the decline of US manufacturing. However, if their trends have now changed (institutions know what’s coming before we do, and they play the long game), then perhaps the decline of US manufacturing is also changing.

Some examples.

$GM, despite not quite looking like it’s been in a downtrend, it is, in a phantom way, as their shares pre-GFC were in the 70’s. That said, the rally from the COVID lows is the first time it’s produced a strong impulse wave in many, many years. And, it’s returned to the 61.8% retracement of that advance, which makes it an excellent candidate for a wave “2.”

GM

Likewise, $F has a very similar look to it. After making lower highs for twenty years, it’s broken trend and is now retesting that from above. That, too, has come back to the 61.8% retracement of the advance from the COVID low, also making it a good candidate for a “2.” And if it’s actually a “nest” of ones and twos this whole time (purple, then yellow, then pink), it may foreshadow years and years of advances just ahead of us.

F

And finally, as goes with GM and Ford, so goes it with $X. This one is a little more complicated because I think it has conducted a “flat” for its wave “2,” but, like the others, it’s come back to retest a trend line that has stood for many years as resistance.

X

So: if these all find support here, then something important is afoot. We can try to imagine what that is, and maybe it is a shift in the status of US manufacturing, but these charts may all be extremely bullish here for the long haul.


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One thought on “Three Charts That Make Me Think We’re In Something Entirely New”

  1. I’m in GM because it has a lot of legacy plants (real estate, plants, equipment). So even if the world goes to h*ll in a hand basket, GM has intrinsic book value (a low price to book ratio.). I hear that this tends to be true of auto and steel manufacturers. Not sure about Ford, but I have heard they have developed a new car that is very fuel efficient.

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