Taking advantage of the Situation: Tire Stocks....

Hey folks,

I believe its time we backed up the truck on tire stocks. And why's that? In case you do not know, there is reportedly a tire shortage that is hurting the mining company industry. Tires are need for industrial vehicles, for heavy duty hauling of coal and precious metals. Anyone following Fording Canadian Coal Trust (FDG) will note a recent report that was released that sent the stock off a cliff. The stock is back above its 50day, but the reaction has got me thinking about tire companies and how they would benefit from the higher prices of tires.


So what tire stocks do I like? Well, there aren't that many publicly traded, so that makes it a little easier.

My number one pick, in terms of availability (on U.S exchange) and recent volume accumulation, is...

Good Year Tire and Rubber Co. (GT) trading at 17.29 on the NYSE

Good Year Tire and Rubber Co. (GT) 3 month chart
















Chart 2


1. Here's the volume (institutions stepping in) that led to the initial breakout.
2. The breakout above the 50day MA, which GT was able to hold and maintain.
3. The buying of GT continued to increase after it hit its October/November low.
4. With today's above average volume in buys, the break out is much easier to see. Buying the stock now in the 17's, would be ideal.





Good Year Tire and Rubber Co (GT) 1yr chart

Looking at the chart, we can see that GT has been slowly been accumulated and has been experiencing some nice buying despite the dips. I believe that the stock has bottomed out and is ready for the next leg up. With the demand of tires up, GT should be burnin' rubber in the next few weeks.







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My 2nd pick for taking advantage of the tire shortage is.....
JP Morgan Chase Co (JPM) which is currently trading at 39.41.
Now before you ask "what the heck does JPM have to do with tires, let alone a tire shortage?", think about this. I'm going to show you a 1 yr chart of JPM....

JP Morgan Chase (JPM) 1 yr chart

At first glance, you may just think, "oh nice the stock bottomed out at the begining of October and then shot up in a bullish run". But why? That is the question!
Lets look at the 3 month chart....











JP Morgan Chase (JPM) 3 month chart


So when did the run up begin? Around October...lets say October 11? Pretty close, right? So What DID happen on October 11 or around that time? Hmmm......lets see if we can find some info...









Titan Intl Inc (TWI) 3 month chart


Oh whats this? This is Titan Intl Inc's (TWI)chart. TWI manufactures tires for giant earth-moving and construction vehicles. You know the ones that coal co's use on their trucks (hint hint). Oh what is that you say? Looks like the company was bought out on...oh looks like October 11. Ya don't say! And by who? One Equity Partners. Who are they? Why, they are just a fancy name for JP Morgan Chase. Yup, thats right, JP Morgan bought TWI. And why? To take advantage of this situation. Its no wonder why JPM' stock has sky rocketed since then.





















So GT and JPM are my fav plays. Some other plays that you should check out are CTB, and BDG. I don't have the time to elaborate on the last two, but you can check them out. Oh and yeah, If you have an Interactive Brokers account or another account that lets you trade foreign equities, check out Michelin Tires. But like I said, GT and JPM are the ones to keep an eye on and possibly play. Now time for a little studying and then bed... Later Folks!