Buyers Still Command the Driver’s Seat in Ford
According to a report from Reuters, Ford Motor Company (NYSE: F) was fifth among the major automakers in terms of sales with a gain of more than 13% in November (Chrysler Group led the pack with 44%.) That was enough to encourage buyers to remain in the driver’s seat on Thursday, as shares of Ford closed in overbought territory below the 200-day moving average for a second day in a row.
And if this turns out to be another instance of buying the rumor and selling the fact, the news may be the catalyst traders have been waiting in order to sell or sell short the stock.
Ford’s rally in recent days has also earned the stock significant ratings downgrades. The stock, for example, opened on Thursday with “consider avoiding” ratings of 2 out of 10. The last time the stock earned a 2 out of 10 rating was in late October after a pair of finishes in technically overbought territory.
To recap, shares of Ford had rallied impressively off their early October lows, gaining more than 35% in less than a month. But that advance pushed the stock into deeply overbought territory and when the inevitable selling arrived, it was relentless. Ford sold-off by well over 5% in two days and was trading lower 12% just over a week later.
Trading in bear market territory since mid-May, Ford is still closer to its 52-week lows reached in early October than it is to its 52-week highs set at the beginning of the year. As such, traders and investors should not be surprised to see value buyers looking for stocks like Ford that have been beaten up, but may move higher as sentiment improves in the broader market. While this may result in higher prices for Ford over the next few months, those with shorter time horizons may want to look to other markets where the short-term edges, from a historical perspecive, are more positive than they are in the market for Ford.
The stock in today’s report was drawn from the data and research available through PowerRatings. To find out more, click here.
David Penn is Editor in Chief of TradingMarkets.com