Harley-Davidson Is Running on Fumes Even Without EU Tariffs

Drive away from this hog.

Motorcycle giant Harley-Davidson (HOG) has been in the news lately, with lots of talk about electric motorcycles that might or might not sound like gas-powered ones. And now we've gotten the almost-laughable threat of Europe retaliating against U.S. blue jeans, booze and motorcycles in the wake of President Trump's proposed steel and aluminum tariffs.

But while Harley-Davidson currently pays an impressive 3.27% yield, let's look at its chart:

Plainly, this chart is just awful -- so awful that to display the stock's technical trend, I had to revert to a Raff Regression (the green lines above) because my preferred Pitchfork tool looked simply ridiculous for this name.

As you can see, the potential for much lower prices still exists. And don't even look at the Chaikin Money Flow (denoted "CMF" above) or the daily Moving Average Convergence Divergence (MACD) unless you're already shorting this name.

But what I find most cautionary here is that despite HOG's really disastrous performance, neither that Raff Regression nor the Relative Strength Index (marked "RSI" above) truly illustrate an oversold condition. Relative Strength is close to doing so in my opinion, but not in a protective way.

What should you do if you're currently long Harley-Davidson? Well, Harley-Davidson traded at critical support on Friday and did recover. Hopefully, that gives the stock a new lease on life.

But look at the Fibonacci Fan model (the blue lines above) and the traditional Fib model (the small orange lines at the right of the chart). They both converge at $48 around May 1. To me, that would be both a target price and a good time to exit Harley-Davidson.

Another thing long-and-wrong HOG shareholders could do is buy $42.50 puts that expire on May 18. That product last traded at $1.95. That will at least protect your "out" if support cracks between now and then.

You can fund most of this purchase by writing a $47.50 call expiring that same day. Those ended Monday at $1.65.

At the time of publication, Guilfoyle had no positions in the stocks mentioned.