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Although I make my market decisions based on price movements as expressed in the charts, I do look at fundamentals to flag stocks for further analysis. Based on their low price/earnings ratios, shares of domestic automakers fit nicely into that category. And more importantly, their technicals back them up as good investment candidates.

Specifically, Ford Motor (ticker: F) and General Motors (GM) appear to be in different stages of a bullish pattern formation. Tesla (TSLA) is already in bull mode and looks ready to continue.

Let’s start with Ford. A long-term chart shows that it has not been an easy ride for shareholders for several years (see Chart 1). And despite its low P/E ratio – the price paid by investors for a dollar of earnings – the stock has not looked cheap. If we look at it technically, however, we will see that last November’s low occurred at about the same level as the prior low set in early 2016. The failure to set a lower low suggests that level is now a solid floor of support and that bears have lost their grip on the stock.

Chart 1

Of course, the stock must prove that it can move higher with an actual breakout above the trendline that has guided it lower since 2014. That line is currently near $13.25, so at the current price near $12.50, there is still a way to go before the bulls can claim control.

There is an early-warning indicator for investors to follow. Using moving-average analysis, a bullish “golden cross” seems very near. This occurs when the 50-day average moves above the 200-day average, and although the analysis is most often applied to the broad market, it still is useful here. A crossover would tell us that the major trend has indeed changed for the better, even if the trendline remains intact.

GM has already broken through a similar trendline, one drawn from the 2013 peak, and even scored a moving-average golden cross two months earlier last September (see Chart 2).

Chart 2

GM shares are already in an official rising trend, and the chart shows no obvious problems, thanks to – or in spite of – political pressures to move some production back from Mexico to the U.S. Money flows into the stock, according to technical indicators that measure accumulation and aggressive buying, are solid.

Finally, Tesla has been in a bullish trend since November and gained roughly 40% since then (see Chart 3). Since net earnings are negative, the P/E ratio is not useful, but patterns on the chart are. What we see over the past two weeks is a classic pause in a rally with lower volume and a relief in overextended momentum indicators. This suggests investors merely took their proverbial foot off the gas rather than aggressively sold the stock.

Chart 3

The implications are that the rising trend will eventually resume, but as with all technical patterns, we need to wait for the actual breakout to be sure. Long-term resistance does not come into play until shares trade in the $285-$290 range. (Tesla traded at $253.79 Monday afternoon.)

Although the ownership and even the definition of a domestic auto company is in question in a global economy, I should mention Fiat Chrysler Automobiles (FCAU). This stock has so far survived accusations of cheating on its emissions tests and erased a monster one-day drop on Jan. 12, but it remains near long-term resistance. It also sports a bearish divergence between price and momentum indicators, so it does not look to be in a good technical place at this time.

But for the others: Ford and GM look to be bargains. Tesla looks to be a trading play and may not be right for conservative investors comforted by solid earnings numbers. But in a market that has soared since the election, these stocks offer more on their charts right now than the major indexes do.

Getting Technical Mailbag: Send your questions on technical analysis to us at online.editors@barrons.com. We’ll cover as many as we can, but please remember that we cannot give investment advice.

Michael Kahn, a longtime columnist for Barrons.com, comments on technical analysis at www.twitter.com/mnkahn. A former Chief Technical Analyst for BridgeNews and former director for the Market Technicians Association, Kahn has written three books about technical analysis.

Comments?E-mail us at online.editors@barrons.com