The ifo institute today provided a sobering picture of the situation in the German auto industry, new passenger car registrations in March fell 17.5 percent below the value of the previous year and Daimler Truck has to close two plants in Brazil for two weeks due to lack of chips. . An overall picture that puts Daimler Truck shares under heavy pressure today and offers a trading opportunity on the short side.
When DAX newcomer Daimler Truck delivered its outlook for the current year along with the balance sheet for 2021 nearly two weeks ago, market participants reacted with buying. Today, however, the stock of the Mercedes Benz subsidiary has returned to the level it was before the publication of the forecast for 2022. And that is not surprising.
Graphics for the values in the article.
The goals for 2022 are not easy to achieve
In the course of the outlook, Daimler Truck emphasized that the order books are currently overflowing. The sales forecast foresees a growth of between 15 and 20 percent, while the profit margin/return on sales of the industrial business should increase between 7 and 9 percent (2021: 6.1 percent) . If that were the case, profits could increase significantly. But it’s not just investors who are skeptical. Since the outlook was filed, five analysts have adjusted their price targets for Daimler Truck shares; at least three of them made it downward.
Because the rosy future that the panorama draws is not so certain. In addition to the mandatory licenses mentioned at the outset at two Brazilian plants, it was reported last week that part-time work is pending at the Mannheim and Gaggenau plants. And not only the lack of chips should be a problem in the future. It is questionable whether it will still be possible to pass on significantly higher energy and material costs 1:1 to customers. And only if Daimler Truck can produce unhindered for the rest of the year, would sales really increase significantly.
Dark mood in the industry
The auto industry survey results released by the Ifo Institute this morning are likely to have fueled today’s downward momentum for the stock. The mood across the industry plummeted even more in March than during the start of the Corona crisis in the spring of 2020. Rising energy costs, restless consumers, continued broken supply chains and shortages of resulting materials are having a massive impact on automakers and suppliers. And the fact that Daimler Truck is not immune to this was confirmed by the report on the forced two-week break in Brazil. As a result, the chart image has now received a “short bias”:
Source: market maker pp4
Bearish signal: rejected at key resistance
Daimler Truck shares were listed on the stock exchange in December as a spin-off from the Daimler Group (today the Mercedes-Benz Group). The action began its “market life” on December 10 at 28 euros. The low of this first trading day (EUR 27.79) forms a prominent technical anchor point. The stock had approached exactly this mark in the middle of last week…and turned down.
On Friday, the short-term uptrend line initially undermined slightly, but the support line at EUR 25.20 still held, as did the 20-day line as the only relevant moving average so far. Both fell during today’s trading (Chart Status: 4pm), which should clear the way for the downside.
In principle, there would be no more technical support on the way to the previous low of 20.28 EUR marked on March 7. Daimler Truck’s share should not be expected to drop immediately to that point. But with this clearly bearish trading signal today, nothing is impossible on the downside, especially given the very negative environment.
Follow the short signal with moderate leverage
A short Morgan Stanley knockout certificate with an unlimited term and a moderate leverage of currently 2.8 (WKN MD26GU) appropriate to the volatility of the stock would be a suitable tool to benefit from this bearish signal. The stop loss could initially be in the region of EUR 26, depending on the share price, which would correspond to a price on the knock-out certificate of around EUR 0.63. If the Daimler Truck stock continues to fall and enters the first price target zone at €22 or below, this stop loss should be raised immediately to at least the entry price.
PS: Note on our long trade on SMA Solar
A brief note on our analysis of the SMA Solar stock last Thursday afternoon (March 31). Since then, the stock has gained around 15 percent and almost hit our first price target of €44.64. Anyone involved here should immediately follow the recommended disposal certificate loss limit for a long time there (WKN HB4T80) well above the price of entry!
Important chart marks:
Resistors: 25.20 euros, 27.79 euros, 35.75 euros
Supports: 20.28 euros
Short Knock-Out Certificate on Daimler Truck Participation
|Knockout Threshold||29,930 euros|
|Writes||Knock Out Short Certificate|
|Stop Loss Certificate||€0.63|
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