Ford Motor (
needs to kick it into high gear.
The shares have been in trouble during the past two months
after a disappointing earnings report shaved 15% from the stock.
However, that decline has stabilized, and buyers need to keep it
I predicted the decline would cease near $12.30 and that
Ford would bounce
quickly back to $13 in January. Thus far, that's exactly what
happened. The shares dipped to as low as $12.10, and are now back
Though I had correctly timed the quick drop and bounce, I thought
there was an outside chance the stock could rally to new highs.
However, the $13.50 level has proven to be an area of strong
selling pressure. So anyone long should consider ringing the
register and taking the gain.
In fact, short sellers may want to begin a position. The shares
have been incredibly responsive to the 50-day moving average
(orange line) during that past 13 months. Since the stock is
below this trend line, and seems to be finding resistance, the
future direction favors more downside.
This chart shows the price of
shares along with an important trend line to monitor.
It's tough to reverse a position. There's always a bias to stay
with the direction that previously brought profits - in this case
a bullish bias. However, the trend appears to have changed for
Ford, and bearish traders should take note.
The trade is easy: go short now with a stop around $13.59. The
shares are at $13.25, so the stop represents a 3% loss.
Meanwhile, the initial downside target is $12, which is 10%
lower. If the indices begin to see some selling, Ford may sink
below $12. So there could be a greater-than-10% decline heading
Equities mentioned in this article: F
Positions held in companies mentioned above: