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Looking At Ford Again

03/11/13 02:28:01 PM
by Koos van der Merwe

It does look as though Ford Motor Co. is hinting at a buy.

Security:   F
Position:   Buy

With the Dow Jones Industrial Average making new highs, is it time to look for stocks to buy, or should you start selling as the promoters of doom and gloom continually put doubt in your mind?

Figure 1 Daily chart showing VOTE line BUY signal
Graphic provided by: Omnitrader.
The daily chart of Ford Motor Co. (F) in Figure 1 suggests that I should look at F as a buy. The chart shows that on February 27, 2013 the vote line gave me a buy signal based on the strategy's 12-period RSI and Verve trailing stop. This was confirmed by a "Red-Green-Long" buy signal on March 6, 2013 and by the internal band and Red-Green strategies long signal on March 7, 2013. Note also that the RSI Indicator was at oversold levels and started suggesting a divergence buy signal: the RSI is making higher lows and the stock price is making lower lows.

Figure 2 Weekly chart showing Elliott Wave count.
Graphic provided by: AdvancedGET.
The weekly chart in Figure 2 shows an Elliott wave count that suggests that F is in a Wave II correction. The RSI is suggesting that the correction may drop further before rising in a Wave 3. Looking back at past history of the RSI indicator, we see that with a previous Wave II correction on October, 2009, the RSI indicator found support at the 54 level. This suggests that the same thing could occur now, and the price of the share could start rising in a Wave III. The support line shown on the chart also suggests a reversal upward.

Figure 3. Daily chart with Elliott Wave count and JM Internal Band suggesting a BUY signal.
Graphic provided by: AdvancedGET.
The daily chart in Figure 3 shows an Elliott Wave count suggesting the price could rise in a Wave 5 with a target of $14.94. The PTI (probability Index) is showing 37. Anything above 32 is positive. With the RSI showing strength, the share price should rise. Do note that the price is flirting with the upper band of the JM Internal Band and has given a buy signal. The JM Internal Band is a 15-period simple moving average offset by 2% positive and 2% negative. A buy signal is given when the price breaks above the upper band.

I would be a buyer of Ford Motor Co, and hold with a target of approximately $14.94.

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.

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