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Volkswagen (VKW:XETRA) €93.75

Exposure to a slowing US economy is not the only reason to short sell Europe’s largest car maker, says Christian Tegllund Blaabjerg, market strategist at Saxo Bank. He reckons that a shorting strategy is fundamentally based on the slowing European economy and Volkwagen’s exposure there. He adds: ‘With a slowing economy in Europe, luxury consumer items such as new cars are one of the first things to suffer. At a time of tightening consumer spending, people are far less inclined to make such a significant purchase. If people do change cars in 2008 the economic outlook may compel them to buy second-hand rather than new.’ From a technical point of view, Saxo’s analysts see Volkwagen’s shares in a downward trend, having fallen 30% since the start of November, and this shouldn’t change in the short term. If the first support level, €92.94, is broken, the price could go as far down as €84.35, adds Blaabjerg.

ACTION: SELL Volkswagen • Target price €84 • Stop loss €99

TIME TARGET: 4 WEEKS