If misery loves company, Ford (NYSE:F) stock investors are no longer alone. Yet in a market that’s been driven into a bearish panic, the choice to steer clear and allocate funds elsewhere is an easy one to see both off and on the F stock price chart. Let me explain.
Just when many may have thought the worst was over, along came Wednesday March 18’s nasty tumble deeper into a bear market as investors quickly erased the prior session’s oversold, government-backed relief rally. On the day the S&P 500 plummeted 5.06%. The broad-based large-cap index also hit fresh bear market lows, took out 2018’s ubiquitous bottom and put the correction’s four week tally at nearly 33%.
Similar over-the-top pain could be seen across risk assets with the fewest of exceptions. From the index’s largest capitalization tech giants Apple (NASDAQ:AAPL) and Microsoft (NASDAQ:MSFT) to its smallest constituents Capri Holdings (NASDAQ:CPRI) or Alliance Data Systems (NYSE:ADS), Thursday was a sea of red. And Ford’s performance within the S&P 500 was no exception. In fact, its 10% drop was larger or even exceptional.
Now with word Ford and automakers General Motors (NYSE:GM) and Fiat Chrysler (NYSE:FCAU) are cutting North American production until the end of March due to the coronavirus and an unsympathetic broker cut, conditions just got more challenging.
JPMorgan analyst Ryan Brinkman fears an industry report issued by IHS Automotive earlier this week which ‘materially lowered’ declining Q1 and full-year estimates for global light vehicle production to -16.6% and -4.8% respectively, is now looking overly-optimistic in consideration of the production halt.
The good news, if any, the cut by JPMorgan remains an above-the-market price target reduction from $9 to $7 for F stock. The bad news is in an oversold market where growth companies are routinely colliding into deep value, Ford is a broken vehicle unworthy of even a test drive.
F Stock Monthly Chart
Source: Charts by TradingView
The price chart in Ford shares is in agreement with the warning above. F stock’s monthly chart has broken every type of key support ranging from price and channel lines, to moving averages and Fibonacci levels. Moreover, Ford shares have been a dog and value trap for years and well before today’s corona-driven problems for the market. And the interpretation is the worst is yet to come.
In Thursday’s premarket, with Ford trading outside its lower Bollinger Band and indicated ever-closer to the 76% retracement level, shares are appreciably oversold by some technical standards. Still and importantly, with stochastics in a bearish crossover pattern and pointing clearly lower within neutral territory, F stock’s latest knife-like movement isn’t likely to turn the corner and become a vehicle investors can safely park in their portfolios.
Disclosure: Investment accounts under Christopher Tyler’s management do not currently own positions in securities mentioned in this article. The information offered is based upon Christopher Tyler’s observations and strictly intended for educational purposes only; the use of which is the responsibility of the individual. For additional market insights and related musings, follow Chris on Twitter @Options_CAT and StockTwits.