An ad from 1957 shows a family playing dominoes in a bubble-top car as it cruises down an six-lane divided highway, its steering wheel pointedly unattended. “One day your car may speed along an electric super- highway, its speed and steering automatically controlled by electronic devices embedded in the road,” reads the copy. “Highways will be made safe -- by electricity! No traffic jams... no collisions ... no driver fatigue.”

Now it finally seems to be happening. Google Inc.'s self- driving cars have covered more than 300,000 miles, most recently wowing the Texas Transportation Forum with a demonstration on the streets of Austin. “The remarkable thing was that it was a little unremarkable,” Coby Chase, director of the Texas Department of Transportation's government and public affairs division, told the Dallas Morning News after his ride.

Googlers aren't the only ones working on self-driving cars. Brad Templeton, an Internet pioneer and robocar advocate, counts 27 commercial and university projects, not including unmanned military vehicles. (Templeton consults for Google but doesn't speak for the company.) The 2014 Mercedes-Benz S Class, for instance, will include an autopilot feature for stop-and-go traffic.

Eoin Treacy's view The pace of technological innovation continues to accelerate in just about every area of our lives. Since many of us spend a great deal of time driving which might otherwise be spent at some more productive activity, the allure of an autonomous vehicle has been a dream for many for a long time. It will be a number of years before these types of cars gain popularity but they certainly seem to represent the future.

Google found support in the region of the 200-day MA and the upper side of the underlying trading range from November and has since rallied to post new all-time highs. It is currently somewhat overextended relative to the MA and a process of consolidation has probably begun.

While autonomous vehicles represent an exciting potential innovation, the conventional automotive sector has returned to an interesting juncture. A considerable number of European and US companies have Estimated P/Es of less than 10 and have returned to find support in the region of their respective 200-day MAs over the last couple of months. Volkswagen (Est P/E 6.65 DY 2.32%), BMW (Est P/E 8.83 DY 3.63%), Fiat Industrial (Est P/E 9.39 DY 2.63%), Ford (Est P/E 9.4 DY 3.04%) and General Motors (Est P/E 8.34) have all pulled back to test their 200-day MAs and the medium-term upside can continue to be given the benefit of the doubt provided they continue to hold in the current region.

Daimler (Est P/E 9.52 DY 4.95%) and Renault (Est P/E 6.94 DY 3.27%) also have relatively attractive valuations but have not reverted towards their means.

While Japanese automotive companies experienced explosive breakouts from late last year, they have entered processes of mean reversion.

The broader market environment, which is skewed towards some profit taking following a very impressive four–month rally, is likely to weigh on both the packaging and automotive shares reviewed above. Some of the strongest rallies are susceptible to mean reversion. Those that are testing the upper side of lengthy ranges may pause while those that have already pulled back to test their means have improved valuations and may lead on the upside as the wider market nears the end of its process of consolidation. .


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