Electric Vehicles A Leading Indicator?

Macro Perspectives: Tue 1 Dec 2020

The broad stock market (S&P 500) finished the month of November up 11%.

Among the biggest movers for the month have been those companies that would benefit from the Biden economic plan, which outlines a wholesale transformation of the economy, to clean energy.

Within that bunch of clean energy stocks, electric vehicle (EV)stocks have been the favored bet. None have been more favored than Tesla - up as much as 52% for the month and at the close on Monday, the stock is up 584% on the year.

Let's take a look at three publicly traded electric vehicle companies that are fighting for market share. (NB: for those interested, Nikola, Nio Inc, Li Auto & X Peng show the same characteristics and could be ones to add into the watchlist).

Lordstown:

Fisker:

As you can see, these stocks have all soared since election day. That's on the underlying bet that Biden will make good on regulating away the oil industry.

But given these charts, I think it's fair to say, the risk to the presumed election outcome is being priced at zero risk. I suspect it's higher than that - maybe a lot.

With that, Tesla had a key reversal signal yesterday - an outside day - that's worth paying attention to...and builds on the fractal analogy I talked about here Tesla.