As gas prices are at multiyear highs, a top technician warns the move could be stirring up trouble for one automaker.
The CARZ Auto ETF, whose top holdings include names like General Motors, Toyota and Ford, has fallen nearly 7 percent this year. This comes as rising gas and oil prices put pressure on consumer discretionary spending.
Furthermore, Carter Worth, head of technical analysis at Cornerstone Macro, noted that the auto ETF, which has seen an impressive 38 percent rally off its 2015 lows, has recently fallen below a key level of resistance around $42.
"One thing we know is that after the double-bottom in the breakout we had a failed breakout," he said Friday on CNBC's "Options Action" "Once you break out you should hold, we've undercut."
The autos ETF reached all-time highs in January, but has fallen nearly 12 percent since. According to Worth's thesis, the move lower has set up a bearish wedge pattern in the charts, indicative of more losses ahead.
The automakers have also been a major underperformer relative to the broader market. The has rallied 28 percent since 2015, while the auto ETF is down nearly 4 percent in the same time period.
Ford, which makes up more than 8 percent of the autos ETF, is down nearly 9 percent for the year but has recently shown signs of resurgence. Shares of the automaker are now up more than 10 percent from their January lows.
Nonetheless Worth warns that despite the move higher, shares of Ford historically tend to fall after hitting the top of their downtrend level — indicating that the relief rally could be coming to an end.
"I think at this point you're about to get your next sell-off. I don't like Ford I want to sell it," he said.
Shares of Ford were trading lower Monday afternoon at around $11.40.
