Where is Ford headed? 5/26/12

I spent several years working with people from Ford and Visteon and have mixed feelings about the company. One thing is for sure, the people were smart, intelligent and hard working. It did not matter whether they were tall or short, black or white or brown, male or female, old or young. Many were from top schools but many were not. It was hard for me to see so many of them lose so much of their retirement wealth through losses in their 401K when tools from technical analysis could have kept them out of trouble.

I remember volunteering for an evening business school class at Ford where we had a rapt audience with many questions and strong interest.

So I wondered where I see F heading next.

The chart current points downwards. Let me be very clear. That means I would not own F stock just right now. The exit signal occurred around 2/24/12 around $12.27 stock price and it has dropped since then to the current price of $10.60. That is a drop of 13.3% in a few months.

Fundamentally on the positive side, F looks promising as the price of oil has been dropping steadily although gas prices have not dropped as much. Perhaps after the Memorial Day weekend we will see further drops. Lower gas prices seem to encourage car buyers. Ford is profitable and also has taken a move to reduce its indebtedness. Thought I saw where their rating had been raised recently. Yet the charts could run a course similar to what happened in July 2011 where it bounced up and then dropped precipitously.  The Koreans are doing very well and Hyundai/Kia a strong competitor.  Companies like Honda and Toyota are also coming back strongly. It would be much safer to be exited on F right now and wait for a technical entry signal. We may see weakness in the markets from the Euro crisis and since many European countries is in a recessionary mode. High unemployment does not favor car buying. The last technical entry signal yielded a 15% return and although I participated in that, I did not do as well as a friend of mine from Ford who rolled his entire Ford 401K in that move and enjoyed a nice 15%+ move upward. He went to cash for the rest the year till date. I know he is patiently waiting for the next upward move signal. Too much risk for me; but risk and reward are tied and one can argue that going in whole hog for a short while and then exiting the market may very well be a safer strategy then being in there all the time or most of the time and being exposed to the vagaries of the market.

I have thought about starting a subscription service for stocks where I would send signals to the subscribers and they would take the responsibility of acting on the signals and keep charge of their accounts. If someone had followed the signals generated from the F chart, they would have done much better than running a 401k without this guidance. Maybe one of these days…