For months on now we have been arguing (with support from analysts) that Ford and General Motors, the traditional combustion engine automakers now electrifying their fleet, should deserve to trade with technology-like, secular-based multiples, and not industrial, cyclical based multiples that they are trading at now. This is because the electric vehicle market they are entering now has so much room for them to grow, given their current brand domination (F-150 is the best selling truck in America for multiple decades). Also, they are using their profits, which multiple EV startups do not have at the moment (like Nio, Fisker or Lordstown Motors), to invest in autopilot and green battery technologies. These are only few of many reasons why F and GM deserve to trade at growth multiples (at least more than 10x forward earnings) rather than at their current 7x cyclical multiple. 

Now, let's say the market has not recognized their potentials yet, so F and GM have been trading with the industrial, cyclical groups. Below here is the chart of Ford in candlesticks, and in solid lines are the Dow Jones Transport Industrial Average (so Industrial), and the US-10 Year Treasury Yield (which arguably, industrial stocks tend to follow). Certainly, Ford does not follow the technology-heavy Nasdaq index (bottom chart).  

So what is the matter?

As you can see, F follows the US10Y and DJT really closely. They all peaked in May-June, have been downtrending all summer. Now, they look to be breaking out of this downtrend. Certainly, if you look at the banks (Citi Group and Bank of America below), materials like steel (Nucor below), and industrial like Caterpillar, you will see that all of them have been breaking out since about Friday last week.

If Ford and General Motors are grouped together with these industrial, cyclical-based stocks, then Ford and General Motors should also be breaking out soon; if it is not the case that breakout patterns have already been forming.

Bottom Line: Ford and General Motors do not deserve to be trading with the industrial/cyclical group. However, if the market has not yet made this determination yet, then as the industrial/cyclical group is rising, Ford and General Motors should be rising as well.