Ford Motor Company (NYSE:F) – Long term supply area in $18-$19

Ford Motor Company (NYSE:F) recovered from its opening hour lows to end the session with a meager 0.63% loss. The next few sessions will show if the end of the correction expected by the bulls really materializes. The volume of 26 million, absolutely on par with the daily average of 27 million, doesn’t provide any clues.

Volume Price Trend Indicator (VPT) of F

3 recalls by Ford Motor Company (NYSE:F) for 220,000 vehicles in North America in the last week of March has naturally made the investors an anxious bunch. They may feel a bit relieved from the absence of any accidents or injuries related to the defective spring on the interior door handle in the recalled 212,911 Explorer SUVs and Police Interceptor vehicles from 2011-13 years. The 1725 Lincoln MKT from 2013-15 and 6500 F series Super Duty ambulance vehicles from 2011-13 are also included in the recall. Now the investors must consider that the numbers pale when compared to the 27 million cars recalled by General Motors in 2014, costing the company $4 billion so far. If the events unfold following the route map of GM, then the impact of this year’s recall on the balance sheet of Ford Motor Company (NYSE:F) should be marginal.

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The investors of Ford Motor Company (NYSE:F) may also remember that the company has boosted its warranty reserves by $400 million last year, keeping in mind the increasing scrutiny to address recalls. The adjusted warranty reserves should assure no impact.

Technically, the stock is showing a very interesting structure. This stock didn’t enjoy the bull market of 2004-07 and kept going down to find its final bottom in 2009. Now it is trading only about 16% lower than the 10-year high and as evident from the chart, once the long term supply area around $18-$19 is conquered, the entire trend will change to the bulls for a target of $30.

About the Author

Terrel is US Markets Daily's business news reporter. She joined US Markets Daily after five years as a print reporter.

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