by Serge Berger | October 25, 2013 8:38 am
Car manufacturer Ford (F) reported a drop in its third quarter profits on Thursday before the start of trading. The company’s profit declined to $1.3 billion compared to $1.6 billion in the year-ago period. On a per share basis the profits were 31 cents versus 41 cents in Q3 last year. Top-line revenue for Ford was reported at $36 billion, up $3.90 billion year-over-year.
Overall, however, the report came in shy of analyst expectations, which were calling for 37 cents per share on revenue of $33.8 billion. At the same time, Ford increased its guidance for the full year as it continues to run a playbook that kept it out of bankruptcy in 2007 and has worked well ever since.
Investor reactions to the company’s report were mixed as the stock closed 1.37% higher in Thursday trading, but well off the intra-day high.
Looking at the long-term logarithmic chart of Ford we see that after a terrifying dip in 2008 as a result of the financial crisis, the stock quickly rebounded in an almost vertical fashion, which by early 2011 brought the stock back to a multi-year resistance area. When looking at charts of more than a few years long, particularly when the stock has displayed a great amount of volatility, such as is the case for Ford, we are best off looking for areas of interest rather than absolute, to-the-penny points.
This long-term chart of Ford gives us a very clear area of resistance, which is just about 5% wide and spans from about $18 up to $19. Simply put, if and when Ford manages to push above $19 with good authority, then the stock should be on its way significantly higher. However, that’s the long-term structure of Ford — let’s have a look at the closer-up time-frame.
On the daily chart, Ford staged a classic breakout on Thursday, which came on well above average volume. The stock still has great support from its rising 100 day simple moving average as well as its latest up-trend, spanning back to September 2012.
Investors with long time horizons can take comfort from the long-term bullish structure of the long-term chart as well as the still medium-term constructive and well-supported daily chart. More active investors and traders could still play the stock from the long side, but would be wise to implement trailing stops as the stock on Thursday closed well off its intra-day highs, which through a purely technical lens could mean Thursday’s breakout was an exhaustion rally. If the stock can consolidate above the $17.50 area it could well move higher into the end of the year.
Learn more about the strategies Serge Berger uses to create profits in the market every day. Download his trading plan in the “Essence of Swing Trading” eBook by clicking here. At the time of publication, Berger had no positions in the securities mentioned.
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