Years back I had made a great trade based on a couple of indicators. It was a trade I listed in my first blog titled "Beginnings" on Visteon stock. It looks like we may have a similar situation developing on Ford (ticker symbol: F). Can the same logic work again? Truth is no one knows and I would not risk life and limb on such a relationship but invest modestly with an exit criteria in mind that would limit my losses should it prove to be wrong. Other news could drown out the relationship and people can change their minds in this fickle market.
So what is this relationship? It is a combination of technical and fundamental indicators – the best way to go. From the attached daily chart on Ford the technicals show a spike in volume as the stock moves up strongly. It has already based and has been showing higher highs during the last 3 months. My trading system kicked in and gave a buy signal with an arrow up. I am adding some Ford stock to my long portfolio. Fundamentally, Ford had a record Quarter despite a soft Europe market. Among the auto stocks, Ford looks promising but above all, rise in volume as the stock moves up on good news should sustain an up move for the next month. Or so I think and will put my money behind it.
Everyone has to judge an entry and exit. The stock is over extended up and the support is quite far down at about $9.90. One could argue that the Risk: Reward is not so hot and wait for a pullback. But sometimes pullbacks do not occur and the stock can run away from you. My logic is to add some now and add more if it pulls back. Ford did reasonably well on a down day – Friday, and I am going long.
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