Ford Tough

[smedleyb]

I've accumulated a not insignificant amount of Ford shares the past two days.  Stock has recently broken out of 2 year down trend, and the credit fundamentals at the company are the best they've been in years (suggesting cheaper borrowing costs going forward).  Throw in the hot-looking Fusion and a revamped Lincoln line, I think $15 is in the bag over the next couple of months.  Setting sell stops under the $10.50-$11.00 range just in case I'm wrong, which I often am. 

[tooqk4u22]

I like the fusion, the lincoln brand is too badly damaged such that it will be difficult to restore in the near term but this is a start, and the two year downward trend has not been broken yet - it would ned to break $13/sh for that to happen.  Also for borrowing costs to drop meaningfully they would have to get a credit rating upgrade from BB+ to BBB- and balance sheet and industry has a way to go before that happens.

Not to mention sales are expected to decline in 2013. 

[smedleyb]

I like the fusion, the lincoln brand is too badly damaged such that it will be difficult to restore in the near term but this is a start, and the two year downward trend has not been broken yet - it would ned to break $13/sh for that to happen.  Also for borrowing costs to drop meaningfully they would have to get a credit rating upgrade from BB+ to BBB- and balance sheet and industry has a way to go before that happens.

Not to mention sales are expected to decline in 2013.

My charts are in logarithmic scale, and the downtrend has clearly been broken (on Oct 31st, to be exact).  Ford CDS spreads are contracting which suggest credit upgrades are immanent (to reflect decreased concerns over Ford's balance sheet).  Most estimates I've seen predict a small bump in EPS ($1.34 EPS vs $1.46 in 2013, Yahoo finance).  I think the potential exists for a much larger EPS beat, especially if Ford's credit is upgraded (which is precisely what the CDS market is forecasting). 

[smedleyb]

Checking chart without logorithmic scale, downtrend still broken.  Perhaps we're experiencing a confusion of terms?:

A downtrend line has a negative slope and is formed by connecting two or more high points. The second high must be lower than the first for the line to have a negative slope. Downtrend lines act as resistance, and indicate that net-supply (supply less demand) is increasing even as the price declines. A declining price combined with increasing supply is very bearish, and shows the strong resolve of the sellers. As long as prices remain below the downtrend line, the downtrend is solid and intact. A break above the downtrend line indicates that net-supply is decreasing and that a change of trend could be imminent.

http://stockcharts.com/school/doku.php?id=chart_school:chart_analysis:trend_lines

Drawing F downtrend line connecting Jan 2011 peak and spring 2012 peak. 

[tooqk4u22]

I know what a trendline is but your're right we are talking about two differents things for this.

You are correct that it broke through the trendline, which it is done several times over the last two years, but I was talking about the fact that the trendline is is still down and the peaks and valleys are still lower than the prior ones and therefore the trend is still down. 

Doesn't mean you won't gain a few points through the line but for the stock to hit 15 as you suggest it will have to break out of the down trend - not sure it will get there.

[smedleyb]

I know what a trendline is but your're right we are talking about two differents things for this.

You are correct that it broke through the trendline, which it is done several times over the last two years, but I was talking about the fact that the trendline is is still down and the peaks and valleys are still lower than the prior ones and therefore the trend is still down. 

Doesn't mean you won't gain a few points through the line but for the stock to hit 15 as you suggest it will have to break out of the down trend - not sure it will get there.

Spot on about the general "trend," which is still pointing down until that last lower high ($13) get's overthrown.

I would be tempted to unload a portion of shares if that $13 area gets probed anytime soon.   As an interesting aside, Toyota (TM) had a nice breakout today out of a 12 month base.  And while the volume wasn't quite as robust as I would like, it does portend good thinks for the sector in general and F in particular.     

[tooqk4u22]

You may be on to something with the sector but one of my concerns it that the foreign segment will come back in a bigger way and take market share from the domestics, this would be negative for Ford obviously.

[smedleyb]

Selling entire F position at 12.76 for a decent 14% gain in less than 2 weeks.   Looking forward to the new year and fresh opportunities.

[tooqk4u22]

Can't argue with the 14% return but what changed your mind to hold and hit 15

[smedleyb]

Can't argue with the 14% return but what changed your mind to hold and hit 15

I thought the move over the past two weeks was of the "too far too fast" variety.  That, coupled with the $13 level you correctly identified as significant resistance, makes me think the stock is due to pause here, if not back off a little before it seriously attempts to bust through $13.  I have every intention of reloading should it pull back around $12.  TM and GM also look good chart wise, so I'm still bullish on the sector.

[smedleyb]

F doubles dividend this morning.  Stock up another 10% in the past 10 days. :(

Momma said never sell a stock in a clear bull trend till the end. 

[lauren_knows]

I don't have the patience or heart for individual stocks, but I just looked at the last month of Ford and saw the uptick you were envisioning.  Hindsight is always 20/20, no?

[smedleyb]

I don't have the patience or heart for individual stocks, but I just looked at the last month of Ford and saw the uptick you were envisioning.  Hindsight is always 20/20, no?

Bo knows my heartache. lol!

[tooqk4u22]

Good call - I even questioned why you didn't hold. Right and wrong in the same trade. 

[Rangifer]

  Hindsight is always 20/20, no?

Tell me about it. I wish I'd had the balls to put 5k into Ford when it was $1.50 back in '08

I eventually got in at ~7.5, but still...


I'm holding long-term, they've revamped their entire line and don't have a single bad car anymore.

[James]

My wife's grandpa got into Ford in '08, he still checks it daily just for fun, he made quite a bundle on it.