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Ford, The Survivor Of An American Industry

07/07/09 04:00:00 PM
by Koos van der Merwe

This company is the sole survivor of the US auto industry, and the charts show it.

Security:   F
Position:   Accumulate

What lies in the future? Is the company strong enough to survive the recession, the slowdown in sales? The charts say yes.

FIGURE 1: FORD, MONTHLY
Graphic provided by: AdvancedGET.
 
Figure 1, a monthly chart, shows how the price has fallen in a five-wave C-wave, from a high of $38.63 in April 1999 to a low of $1.01 by November 2008. The chart suggests that Ford Motor Co. is on the mend and the price should now rise in a wave 1 of a new bull market. The Fibonacci retracement suggests targets for this rise with the 15.44, the 38.2% level being the most likely because of its coincidence with a major resistance level. My preferred indicator, a stochastic 21,5,3 suggests a rise in the price. The chart suggests an interim resistance at $9.72.



FIGURE 2: FORD, DAILY
Graphic provided by: AdvancedGET.
 
Figure 2, a daily chart, shows that the price is tracing a wave 4 correction in a wave 1 rise. A consolidation triangle is forming, with a breakout buy signal at 6.56 and a target of $11.54 (6.56 - 1.58 = 4.98 + 6.56 = 11.54) and a wave 5 target of $8.33. The probability index (PTI) of this happening is 53%, not as strong as we would like, but acceptable. The relative strength index (RSI), however, is suggesting weakness in the short term, probably to retest the support line at $6.56.

Ford is a stock worth watching. For the first time in 53 years, it has taken the lead in sales in June. Management is sound and its debt is being properly managed.




Koos van der Merwe

Has been a technical analyst since 1969, and has worked as a futures and options trader with First Financial Futures in Johannesburg, South Africa.

Address: 3256 West 24th Ave
Vancouver, BC
Phone # for sales: 6042634214
E-mail address: petroosp@gmail.com

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Date: 07/08/09Rank: 3Comment: 
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