Ford's Stock Is Built Tough

06/28/04 10:31:59 AM

by Kevin Hopson

Bullish technicals and bearish market sentiment could be a winning combination for Ford Motor Company.

Security: F
Position: Accumulate

Though it has been a while since I last touched on Ford Motor Co. (F), the long-term picture continues to be bullish. Market sentiment towards the stock remains extremely pessimistic despite the fact that Ford has run from $14.00 to $16.00 over the past six weeks, and short interest - as of June 7 - was still on the high side at 97.7M shares, which equates roughly to 9.0x average daily volume. Additionally, 69 percent of the covering analysts have a hold or sell rating on the stock, which is unchanged from two months ago. Given Ford's strong earnings performance last quarter and management's higher guidance for 2004, I would expect some of this bearishness to subside. Since this has failed to occur, it is likely a sign that Ford is headed higher.

Technically speaking, Ford is testing key short-term support right now with the stock's 10-day moving average ($15.78), the top red parallel line and the 1B channel line have all converged around the $15.80 level. Just to note, the 1B channel line was drawn at an equal distance to the three channel lines in the black pitchfork. If you look back at my prior article "Using Pitchfork Channels To Determine Support And Resistance," you will understand the mechanics of this and how it works. In any event, the stock has been trading between the bottom parallel line of the black pitchfork and the 1B channel line since early May. As a result, the $15.80 level could be a good place to buy in the near-term.

Graphic provided by: Stockcharts.com.

If prices eventually breach support here, I would look for ultimate support in the $15.00 to $15.10 range. This is the site of the stock's 50-day moving average ($14.98), the green median line and the 2B channel line. Given the confluence of uptrend line support here, this is where I would be most aggressive in buying the stock. Since the technical picture remains positive and market sentiment towards the stock continues to be overly pessimistic, I would look to accumulate shares of Ford Motor Co. in the near-term. Though the two support areas I mentioned ($15.00-$15.10 and $15.80) are the ideal places to go long, I would be a buyer anywhere in the $15.00 to $15.80 range.

Kevin Hopson

Kevin has been a technical analyst for roughly 10 years now. Previously, Kevin owned his own business and acted as a registered investment advisor, specializing in energy. He was also a freelance oil analyst for Orient Trading Co., a commodity futures trading firm in Japan. Kevin is currently a freelance writer.

	Glen Allen, VA
E-mail address:	hopson_1@yahoo.com

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TECHNICAL ANALYSIS

Ford's Stock Is Built Tough

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