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March 05, 2012 at 14:06 PM EST
Ford, GM Off; Rotate Those Tires
While consumer discretionary stocks’ multi-year run may be played out, market strategist Rick Bensignor favors stocks tied to the automotive industry. Shares of Ford (F), whose yield is now 1.6%, were off 2.3% Monday, or 29 cents, to $12.42. General Motors (GM) was off 2.2%, or 57 cents, to $25.88. GM and Chrysler Group are [...]

While consumer discretionary stocks’ multi-year run may be played out, market strategist Rick Bensignor favors stocks tied to the automotive industry.

Shares of Ford (F), whose yield is now 1.6%, were off 2.3% Monday, or 29 cents, to $12.42. General Motors (GM) was off 2.2%, or 57 cents, to $25.88.

GM and Chrysler Group are on the verge of selling full-sized pickup trucks that can switch between compressed natural gas and gasoline. Reality is, there are only about 500 fueling stations nationwide with natural gas pumps available to the general public, according to this CNNMoney story. The story overshadowed last week’s news that GM will idle production of its battery-powered Chevrolet Volt for five weeks because of slow sales.

Still, Bensignor, chief market strategist at Merlin, says,

“We can make an argument to rotate out of the consumer services area and into the more beaten down automobiles and components names.”

The chart on the consumer discretionary sector shows a steep upward line from mid-2008. Bensignor sees an “exhaustion reading will likely come in at the end of the second quarter” and that the consumer discretionary group will tread water at best over the next year compared to the Standard & Poor’s 500 index overall.

He thinks hotels, restaurants, leisure businesses and companies in consumer services are candidates for trimming, while automobile stocks and firms that make automotive components are hovering near a long-term secular bottom.

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