Auto manufacturers have taken some limelight early this week with Ford (F) announcing its exit from electric vehicles and Tesla (TSLA) announcing positive results from their robotaxi tests. Better than expected, updated guidance for Ford is helping keep shares around flat intraday Tuesday (12/16), while Monday’s (12/15) action brought Tesla’s shares within one box of its all-time chart high.

Prior to this week’s action, Ford returned to a buy signal in September and positive trend in October on its default point and figure chart, which improved the stock to an acceptable 3 for 5’er. An examination of the more sensitive 0.25 point per box chart reveals a return to a buy signal with last Friday’s (12/12) action, matching the October rally high in the process. Along with showing positive near-term market and peer relative strength, F ranks within the top quartile of the Autos and Parts sector matrix.

On the other hand, Tesla (TSLA) moved back into a positive trend and returned to a buy signal in the latter part of November before seeing shares better early November’s rally high during December’s trading. The trend change brought TSLA up to a 5 for 5’er in technical attribute rating and the stock has ranked within the top decile of the Autos and Parts sector matrix for the better part of the last three months.

Both stocks are actionable at current chart levels as well as on a pullback toward the middle of the 10-week trading bands. Note that for Tesla, a move into the $490 range would mark a new all-time high for the stock, while shares of F would achieve a 52-week high with a move above $14. Initial support for TSLA resides at $384, while support for F can be found at $12.50 and $11.50.

While there have been near-term positives for the subsector’s indicators, like the bullish percent (^BPAUTO) and RS in Xs (^RSXAUTO) indicators reversing into Xs, their low readings of 36% and 44% are below 2025 high marks and highlight recent improvement has come from a small group of stocks. Along with Ford and Tesla contributing to the improvement within the subsector, names like General Motors (GM) and Rivian (RIVN) are also among those contributing and that present positive overall technical pictures.

General Motors has been on a buy signal since April and maintained a positive trend since May. Following a sixth consecutive buy signal in the latter part of November, GM continued to rally, culminating in a new all-time high at $83 with intraday action Tuesday (12/16). GM now resides in overbought territory, so those who would be seeking new or additional exposure to the stock would look for consolidation around the $80 level along with a normalization of the 10-week trading band.

Rivian (RIVN has maintained a buy signal and positive trend since mid-November, and Friday’s (12/12) action brought about a third consecutive buy signal as well as a 52-week high at $19.50.  RIVN improved to a 5 for 5’er after giving a peer relative strength buy signal following Monday’s (12/15) action for the first time in the stock’s history. This follows the stock’s first market RS buy signal against the S&P 500 Equal Weight Index (SPXEWI), which occurred in mid-November alongside the positive trend chart change. Intraday action Tuesday (12/16) has brought the point and figure trend chart back into Os at $18 and in actionable territory for the stock. Note the next potential resistance hurdle lies at $24, while support can be found at $16 and $15, the bullish support line.  

Among the auto manufacturers maintaining buy signals, the four mentioned above have been the recent movers and shakers. Many of the German and Japanese manufacturers maintain buy signals, but present weak technical pictures along with low trading volumes for some of the U.S. listed securities for those companies. While a similar story for quite a few international auto manufacturers, one to potentially watch is Toyota Motor Company (TM), which has shown some positive technical developments of late.

While auto manufacturers have seen their fair share of potential headwinds, the technical pictures of those names mentioned highlight which names investors believe are weathering the current industry environment.

Momentum investors and value investors are often viewed as polar opposites. The two approaches definitely have their differences. Momentum investors buy stocks that are appreciating (showing positive momentum), while value investors generally buy stocks with depleted (undervalued) prices. Each approach looks at different calculations to arrive at target stocks, and they often function on different time horizons.

Of course, momentum and value investing also have some similarities. Both investment approaches look to hold stocks they expect to appreciate at some point in the future. Otherwise, what is the point of investing? When implemented successfully, both approaches have a repeatable process that can be used to identify target securities.

So, which process is the best? Are we better off buying stocks that already have a proven track record of appreciation, or should we buy stocks that have potentially been held below their perceived fair market value?

The correct answer could be…both. No single approach is going to be the best approach at all times. We are partial to momentum investing here at Nasdaq Dorsey Wright since it is the backbone of our investment process. We understand (perhaps better than most) that focusing on momentum does not work every time, but it can work over time when implemented consistently. Value investing often functions the same way even though the approach is different. Some periods work well for value investing, and others do not. This creates two different return streams for the two approaches. The best performing return stream will vary depending on the market environment. These two return streams are also typically inversely correlated with one another (source: Value and Momentum Everywhere by Clifford Asness et all). Therefore, combing the two return streams together can create a more consistent return profile over time.

The First Trust Dorsey Wright Momentum & Value ETF (DVLU) seeks to follow a systematic process that combines aspects of both factors into a single approach tracking our Momentum Plus Value Index. That process takes a broad inventory of US large and mid-cap equities and compares them to the market using relative strength (momentum). Once we determine which stocks pass the initial RS screen, we then rank them based on a composite value score that accounts for price-to-earnings, price-to-sales, price-to-book, and price-to-cash flow. The 50 securities with the highest value score at each quarterly evaluation are selected as the index constituents.

This process has led to positive technical development from DVLU over the past few months. The fund moved sharply lower from last December through April, giving three consecutive sell signals. However, DVLU rebounded sharply along other global equities in late April, and has continued to show consistent improvement over the past several months. The fund moved back to a positive trend in August, gave a second consecutive buy signal in November, and pushed higher to new all-time highs in December. This improvement led DVLU to a strong 5.77 technical fund score (out of 6 possible points), paired with a positive 2.82 score direction. DVLU has risen 23.68% on a price return basis so far this year, including a return greater than 7% over the past 30 days (through 12/15), highlighting the strong momentum heading into year end.

Disclosures:

This article is intended only for financial professional use only. Not Intended for retail investors.

Click here for more information from Invesco on the First Trust Nasdaq Dorsey Wright Momentum & Value ETF (DVLU): https://www.ftportfolios.com/Retail/Etf/EtfHoldings.aspx?Ticker=DVLU

Dorsey, Wright & Associates, LLC is owned by Nasdaq, Inc. and we have affiliates who also provide financial services, research, information, and act as Broker/Dealers to a wide variety of clients. Our affiliates use information we create to create indexes, which are then used to create Exchange Traded Funds. These things create a potential conflict of interest in that we may have an incentive to promote or use the products and services of our affiliates and business partners. A number of Dorsey Wright representatives are registered with and hold securities licenses with the affiliate broker dealers. In this capacity, they assist with marketing and distribution of Exchange Traded Products.

While we make every effort to be free of errors in this report, it contains data obtained from other sources. We believe these sources to be reliable, but we cannot guarantee their accuracy. Officers or employees of this firm may now or in the future have a position in the stocks mentioned in this report. Dorsey, Wright is a Registered Investment Advisor with the U.S. Securities & Exchange Commission. Copies of Form ADV Part II are available upon request.

Daily Option Ideas for December 16, 2025