FORD
Still room for Ford to run...downOn March 24, 2017 the Ford Motor Company (F), 50 day moving average (MA) crossed above its 200 day. Historically this has occurred 37 times. When this happens, the stock does not always continue to drop. It has a median drop of 5.197% and maximum drop of 23.281% over the next 23 trading days. Currently the 50 MA and 200 MA have crossed each other 4 times in the last 27 trading days. This tells us there are either big swings or stagnation. Both times the 50 MA crossed over the 200 MA, the highest gain was only 1.269%. The last two times cross ups and cross downs occurred close to each other was before and during the "financial crisis" in 2007 and 2008. On both of these occasions the maximum gain on the cross up was 0.897% over the next 25 trading days, while the stock dropped 20.213% and 8.705% when 50 MA crossed below 200 MA (which is our current situation). Since November 2007, the minimal drop of the stock when the 50 MA crosses below the 200 MA has been 2.778% (October 2014). The other three minimal results were losses of 4.000% (January 2014), 5.197% (July 2015), and 7.0393% (June 2012).
When we take a look at other technical indicators, the relative strength index (RSI) is at 26.6610. RSI tends to determine overbought and oversold levels. I personally use anything above 75 as overbought and anything under 25 as oversold. The current reading declares the stock is approaching oversold, but still has room to drop.
The true strength index (TSI) is currently -8.4195. The TSI determines overbought/oversold levels and/or current trend. I solely use this as an indicator of trend as overbought and oversold levels vary. The TSI is double smoothed in its calculation and is a great indicator of upward and downward movement. The current reading declares the stock is trending downward.
The negative vortex indicator (VI) is currently 1.3790. The VI determines current trend and direction. When the positive level is higher than 1 and higher than the negative indicator, the overall price action is moving upward. When the negative level is higher than 1 and higher than the positive indicator, the overall price action is moving downward. The current reading declares the stock is trending downward. Even though it is at a high level, it can continue to go higher in a negative manner for the stock.
Considering the moving average crossover, RSI, TSI, and VI levels, the overall near-term stock direction appears to be trending downward. Based on historical movement compared to current levels and current downtrend, the stock could drop at least another 4.70% over the next four weeks.
F: Ford can trigger a weekly uptrend next weekLet's enter longs here at market open. A good option is to go long stocks. A 19% account position would be a good starting point, you can build this position during 3-5 days. Or you can simply long calls at the money for 1 month to use up less margin.
You can buy the equivalent of a 20% account position, for only 5% of the cost. I'd reccomend the 12.00 strike, March 17th call options. That's rather economic right now, but you would be in a risky position if price doesn't hit the weekly uptrend trigger level at 12.86 quickly.
Good luck,
Ivan Labrie.
Short book: GM broke below earnings support, to follow F soonToday we added a couple shorts, I'm posting the trades we currently have open but not providing entry/stop suggestions. Only trade them if you have a trading strategy, or, ask me if you're interested in learning more about the one we use (Tim West's 'Key Hidden Levels' and 'Time at mode').
We have some worrying bearish signals, so it's a good idea to have a market neutral position, picking stocks to short, while still looking for longs in undervalued companies.
See related ideas for the rest of the trades we took. You may still be able to join them or wait for a secondary entry when/if we decide to add to them.
Good luck,
Ivan Labrie.
$F IS A CLEAR BUYLooking to buy $F at $12.00.
Hereis why:
1) They have a low earnings estimate that I believe they will smash.
2) Tonnes of great new products that sold like crazy this year; Focus RS, Mustang 350, Mustang 350R, Ford GT: ALL SOLD OUT
3) Best Selling Truck in the WORLD!!
I believe the Ford is the most undervalued stock in the transportation sector and I will be holding this buy until it reaches it's last highs of over $40 like I know it can.
Above you can see some estimates of where I think this stock is headed.
FORD MOTORS: awaiting A GOOD LONGFord Motors Co : after not a great earnings and following decline, now FORD looks like possible recovering towards bullish up-trend, or a correction before a downtrend.
So, as usual we have two plans to work with F:
Plan A : today we buy a half of a position and wait until additional signals that F can really recover.
Plan B : in the case that we see during trades this week F will not have confident growth, we need to be prepared to turn the position short.
For more ideas visit: mercuriusam.wordpress.com