by Serge Berger | March 5, 2014 8:17 am
While both Ford (F) and General Motors (GM) are currently hiding in the shadows of Tesla’s (TSLA) glory, both companies are currently presenting at the Geneva Motor Show, while F stock and GM stock are trading at crucial technical levels. Anytime I see a stock trading at technically significant levels while the company is in the news, I take notice — this often leads to profitable opportunities for active investors and traders.
The Geneva Motor Show is an important showcase event for automakers, particularly for the more upscale segment in cars. More important from an investor standpoint, however, is what comments we might hear form automaker executives.
For instance, on Tuesday, Ford’s COO Mark Fields warned that the car industry’s investments in BRIC nations has gotten ahead of itself and currently has too much capacity. This type of comment had potential to pressure F stock, but instead, Ford traded higher by more than 1%.
On Monday, the big three automakers — General Motors, Ford and Chrysler — all reported February sales, which came in mixed due to bad weather, particularly in the Northeast and Midwest regions. This also didn’t hurt share prices too significantly, which at the very least shows some marginal resiliency.
The 16-month charts of both F stock and GM stock show that they are holding on to critical support lines, but have come well off of their 2013 highs. Through the same lens, both stocks are currently trading off a still feeble-looking bounce from the early February lows and have more work to do to build more solid-looking charts.
On the daily chart, GM stock still has to make up its mind whether it is ready to really prowl higher again or is ready to falter lower and out of the bear flag pattern (black lines) currently in play. GM stock would need to overcome the $38 area before looking more stable on the daily charts.
F stock trades at a technically even more interesting area, and in a tighter formation. Note that the stock currently is nestling up at immediate lateral resistance which also coincides with its 50 day moving average (yellow). A break past there could offer a move up to the next confluence resistance area, made up of the October 2013 downtrend as well as the 100- and 200-day moving averages.
If and when F stock manages to break past this resistance area, upside toward the October highs opens up.
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Download Serge’s trading plan in the Essence of Swing Trading e-book here. As of this writing, he did not hold a position in any of the aforementioned securities.
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