Most car companies are hitting highs of recent along with the market but much of the move is based off the ideas that car sales will rebound.  If you look at Toyota, Honda, and Ford, they are making either new highs or close.  I wished I would have made this trade but unfortunately I did not.  But however I would like to look at whether the one billion dollar program will help the car companies.  One billion divided by $3,500 to $4,500 would provide the incentive for sales of about 250,000 cars so will this ultimately help them recover.  We’ll need to look at the large total US car sales number which is about 7.7 million for last year.  That 250,000 cars is about 3% of total sales which will help but will it ultimately save the industry.  The resounding answer is no.  It may make the numbers a little better and help adjust inventories for this year but the hype behind this is probably overly optimistic.  But ultimately this does help but does not exactly back the price to earnings of Toyota (TM $82.65) and Honda ($30.70) which are trading at respective PEs of about 26 and 24.  I do say that they are good investments if they pull back as the number of imports being bought are actually in an uptrend while domestics are in a downtrend. Toyotal faces major resistance at $88-90 while Honda faces resistance at about $32.  There is slight upside but not much.

I hope to be writing more as my business projects are keeping me busy but in the end, unless you’re a big time trader, you need to make a good living doing something else.

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