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STOCKS


Ford Remains Tired

08/14/01 12:04:32 PM
by Austin Passamonte

Fibonacci retracement, stochastics and chart patterns are used to analyze future moves for Ford Motor Co.

Security:   F
Position:   N/A

Ford Company's woes with the Firestone fiasco may not be the last of this stock's price decline. From a fundamental basis, downgrades this afternoon are predicated upon possible reduction in dividend payments ahead. This is a critical consideration for most value investors who hold these shares long. A weak to questionable economy going forward doesn't offer clear upward guidance in the near-term, either.

Taking a look at the stock's internal temperature confirms fundamental guesswork. Signs point to a continuation of Ford's prevailing downtrend ahead:

(Weekly & Daily Charts: F)

Figure 1: For Ford, the monthly (left) and weekly (right) charts are hinting at a similar price target, around $19.
Graphic provided by: Quote.com.
Graphic provided by: QCharts.
 
I like to use two different time frames for the same underlying symbol to see if any congruence exists. In Ford's monthly chart (left) we have a Fibonaci retracement bracket drawn from relative lows near early 1997 to recent highs in 1999. The 62% retracement level at $23.50 has been a price magnet for over a year and continues to be. Should that fail to hold, our next level down is the $19 area. Stochastic values are nearing oversold extreme but have room left for further decline.

Does the weekly chart confirm or deny? Well, stochastic values are in the early midst of a bearish reversal as well. We also see a clear bear-flag pattern confirmed by the close below last week and price action continues lower from there. The latest recent high was near $31 and the recent consolidation centers near $25 for a $6 span in price. Commonly we have consolidations form halfway through a move which in this case projects a target $6 lower from the breakdown at $25, which would be the $19 area.

Monthly charts suggest $19 may be next and weekly chart technical indicators agree. Two different time frames and three different studies (Fibonacci retracement, stochastic values, and chart patterns) all point to the same evidence: a downhill ride for Ford appears to have smooth sailing ahead!



Austin Passamonte

Austin is a private trader who trades emini stock index futures intraday. He currently trades various futures markets from home in addition to managing a trader's educational forum

Title: Individual Trader
Company: CoiledMarkets.com
Address: PO Box 633
Naples, NY 14512
Website: coiledmarkets.com/blog
E-mail address: austinp44@yahoo.com

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Date: 08/23/01Rank: 5Comment: Excellent content and well written
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