Ford Chart: Different Trade IdeasThis chart shows a number of possible directions that price could take and is meant to spawn multiple trade ideas. I firmly believe in diversifying positions and trade ideas within the holdings of one individual asset, but I posted up an example with targets for a long trade that will help to manage risk by utilizing major resistance, as well as Fib levels, the Gann Fan (always a 45 degree angle), the Stochastic, and the Awesome Oscillator. I also tossed in an Elliott Impulse wave on the big spike so that you can see how you might trade a big breakout and know which phase you're in during the trade. Regardless, your satisfaction with this trade idea will depend on your fundamental views of auto-manufacturing. If you think American auto manufacturers are going to get crushed, don't buy it. I do not believe that that trend will continue on a long term basis. Happy Hunting Everyone.
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.