GM's Recall Scandal Could Spread to Parts Suppliers

NEW YORK (TheStreet) -- What's with the automobile industry with all of those recalls? Toyota (TM) has recalled 6.75 million vehicles worldwide after problems were found in steering columns, wiring harnesses and seat railings, and this includes the popular Prius hybrids. Volkswagen told dealers to suspend the sale of some models due to the risk of a fire.

These issues are occurring in the wake of the General Motors (GM) recall scandal where a part that cost just 57 cents to make by Delphi Auto (DLPH) is the culprit that caused defective ignition switches 13 years ago, that caused 13 deaths.

This issue was ignored during the GM taxpayer bailout. As the story goes, Delphi apparently told GM the part causing the problem was below specifications but GM used them anyway thinking that they were not unusable.

On Thursday there were two announcements from GM: The company placed two engineers on paid leave as part of this recall investigation, and the auto maker will take a first-quarter charge of $1.3 billion to cover costs related to recall repairs.

We crunched the numbers to help you decide if and when to invest. Here are the nine profiles and the "Crunching the Numbers" tables follow.

BorgWarner (BWA) ($60.40) is up 8% year-to-date but closed Thursday below its 21-day simple moving average at $61.33. The stock traded to an all-time intraday high at $63.89 on April 2.

The weekly chart is positive but overbought with its five-week modified moving average at $60.06 with the chart showing parabolic characteristics. A monthly value level is $51.80 with weekly and quarterly risky levels at $64.94 and $78.07.

Delphi Auto ($66.63) is up a leading 10.8% year-to-date despite supplying the ill-fated part to General Motors. The stock closed below its 21-day SMA at $67.02 on Thursday after setting an all-time intraday high at $70.48 on April 2.

The weekly chart is positive but overbought with the five-week MMA at $65.76. A semiannual value level lags at $42.57 with a quarterly pivot at $67.09 and monthly and weekly risky levels at $69.06 and $70.30.

Ford Motor (F) ($15.63) is up just 1.3% year-to-date and recent strength stalled at its 200-day SMA at $16.37. The stock closed Thursday 2 cents below its 21-day SMA at $15.65.

The weekly chart is positive with the five-week MMA at $15.59. Quarterly and monthly value levels are $15.20 and $15.17 with weekly and semiannual risky levels at $16.07 and $16.73.

Federal Mogul (FDML) ($17.53) is down 10.9% year-to-date and closed Thursday just above its 200-day SMA at $17.41. The stock traded to a 52-week intraday high at $23.62 on Jan.8 then traded as low as $15.17 on Feb.5 holding its 200-day SMA.

The weekly chart is neutral with its five-week MMA at $18.05. Semiannual and quarterly value levels are $13.78 and $9.08 with weekly and semiannual risky levels at $19.39 and $21.10.

General Motors ($33.30) is down 18.5% year-to-date and has been below its 200-day SMA at $36.64 since March 11. The stock traded to an all-time high at $41.85 on Dec. 26 then traded as low as $33.30 on Thursday.

The weekly chart is negative but oversold with its five-week MMA at $35.24. Semiannual and quarterly risky levels are $36.09 and $36.15.

Johnson Controls (JCI)($46.32) is down just 9.7% year-to-date and is above its 200-day SMA at $45.18. The stock traded to an all-time intraday high at $52.50 on Jan. 13 then traded as low as $43.85 on Feb. 3.

The weekly chart is negative with its five-week MMA at $47.45. A quarterly value level is $43.98 with a semiannual pivot at $47.15 and weekly and monthly risky levels at $49.27 and $53.16.

Lear Corp (LEA) ($82.41) is up just 1.8% year-to-date after trading to an all-time intraday high at $87.19 on April 3 and closed on Thursday just below its 21-day SMA at $82.95.

The weekly chart is positive but overbought with its five-week MMA at $81.82. Quarterly and annual value levels are $77.44 and $76.77 with monthly and weekly risky levels at $86.85 and $89.19.

TRW Automotive (TRW) ($79.72) is up 7.2% year-to-date after trading to an all-time intraday high at $84.49 on April 3 then closed Thursday below its 21-day SMA at $81.14.

The weekly chart shifts to negative with a close today below its five-week MMA at $80.10. Monthly and quarterly value levels are $79.40 and $78.99 with semiannual risky levels at $82.23 and $83.19.

Visteon Corp (VC)($86.57) is up 5.7% year-to-date after trading to an all-time intraday high at $90.63 on April 3. Thursday's close was above its 21-day SMA at $86.20.

The weekly chart is positive with its five-week MMA at $85.32. Quarterly and semiannual value levels are $78.34 and $72.36 with weekly and semiannual risky levels at $89.91 and $93.29.

Crunching the Numbers with Richard Suttmeier: Moving Averages & Stochastics

This table provides the technical status for the stocks profiled in today's report.

There are five columns with moving average titles: Five-Week Modified Moving Average, 21-Day Simple Moving Average, 50-Day Simple Moving Average, 200-Day Simple Moving Average and the 200-Week Simple Moving Average.

The column labeled 12x3x3 Weekly Slow Stochastics shows the pattern on each weekly chart with readings from Oversold, Rising, Overbought, Declining or Flat.

Interpretations: (stocks below a moving average listed in Red are below that moving average)

Five-Week Modified Moving Average (MMA) is one of two indicators that define whether or not a weekly chart profile is positive, neutral or negative. The other is the status of the 12x3x3 weekly slow stochastic.

A stock with a positive technical rating is above its five-week MMA with rising or overbought stochastics.

A stock with a negative technical rating is below its five-week MMA with declining or oversold stochastics.

A stock with a neutral technical rating has a profile that is not positive or negative.

The 200-Week Simple Moving Average (SMA) is considered a long-term technical support or resistance and as a "reversion to the mean" over a rolling three to five year horizon. (even Apple declined to its 200-week SMA in June 2013)

The 21-Day Simple Moving Average is a short-term technical support or resistance used by many hedge fund traders to adjust positions. A stock above its 21-day SMA will likely move higher over a rolling three to five day horizon and vice versa.

The 50-Day Simple Moving Average is also a technical support or resistance used by many strategists and commentators in financial TV.

The 200-Day Simple Moving Average is another technical support or resistance and I consider this level as a shorter-term "reversion to the mean" over a rolling six to 12 month horizon. (even Apple tested or crossed its 200-day SMA in nine of the last 10 years)

Crunching the Numbers with Richard Suttmeier: Earnings & Where to Buy & Where to Sell

This table presents the levels at which to buy on weakness and where to sell on strength.

EPS Date is the day the company reports their quarterly results.

EPS Estimate is the earnings per share estimate from Wall Street analysts.

Value Levels, Pivots and Risky Levels are calculated based upon the last nine weekly closes (W), nine monthly closes (M), nine quarterly closes (Q), nine semiannual closes (S) and nine annual closes (A). I have one column for pivots, which is a magnet for the period shown. The columns to the left of the pivots are first and second value levels. The columns to the right of the pivots are first and second risky levels.

Investors who wish to buy a stock should use a good-until-canceled GTC limit order to buy weakness to a value level. Investors who want to sell a stock should use a GTC limit order to sell strength to a risky level.

At the time of publication the author held no positions in any of the stocks mentioned.

Follow @Suttmeier

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff

Richard Suttmeier is the chief market strategist at ValuEngine.com.

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