Albany, New York (09/23/2014) – Ford Motor Company (NYSE:F) (Closed: 16.36, Down: 1.74%) had a big down day yesterday, despite a reiteration of the “Overweight” rating by J.P. Morgan and a raise in the target price to $22 from the previous target of $21. It is definitely not a morale booster for the bulls that the street looks divided in its opinion with 50-60% of the analysts giving the stock a buy rating and the rest giving a sell rating. Anyway, the stock created a near perfect red Marubozu after the Turning Top candlestick on Friday, with a lot of bearish implications in the short term. The volume at 23.7 million was not extraordinary against an average of 24.7 million, but then a selloff really doesn’t need that much volume as a stock can fall on its own weight.
The long term chart shows the stock achieving its life high at $40.72 in 1999, just like most IT stocks despite belonging to a totally different segment. The subsequent bear market brought the stock down to $6.58 in 2003 and after a brief rally to $17.34 by early 2004, the next major down move produced a lower low at $1.01 in 2008, when the company needed a government bailout to survive. The liquidity pump took it to $18.97 by 2011 before a year-long correction. In 2013, the stock stalled for 4 months near $17.50-18.00 levels and made a high of $18.12 this year.
The bulls may think of an Extracting Triangle pattern as their best case scenario, but the supply pressure from the area around $18 may turn out to be too heavy for the stock. No matter how many broking houses recommend it, the stock must tackle the decade long resistance area of $18-20 before thinking about the higher levels.
Even the short term charts are not pointing to any immediate bottom and $15.90 or even $14.50 can be seen in the coming days. Investors may wait for a better opportunity to invest in the stock.