Buy Alert: Ford Motor Company (F)

By Jim Pearce • March 30, 2017

TRADE INSTRUCTIONS
Date: March 30, 2017
Name: Ford Motor Company
Symbol: F
Type: Open
Limit: Buy below $12

TRADE TARGETS
Holding Period: 2 months
Target Return: 8.3%
Annualized Return: 49.8%
Target Price: $13
Stop Loss Level: $10.75

COMPANY DESCRIPTION
Ford Motor Company, together with its subsidiaries, designs, manufactures, markets, and services automobiles in North America, South America, Europe, the Middle East and Africa, and the Asia Pacific. Link to company website.

TRADE RATIONALE
I’ve been keeping my eye on Ford for the past five months, waiting for it break down beneath $11.50 where it last closed on November 8; the day of the U.S. presidential election. It ran up above $13 a month later, then traded sideways until two weeks ago when it began a 10% slide down the charts after the company revealed its intentions to invest heavily in developing an autonomous vehicle to enable ride sharing by 2021.

It probably wasn’t smart for a company that is in the business of selling vehicles to announce its desire to engage in an activity that could have the effect of reducing the need for consumers to purchase more vehicles. Combined with its reduced outlook for earnings over the remainder of the year, Ford has pretty much done everything it can over the past couple of months to discourage shareholders from sticking with the stock.

But therein lays the potential for a quick trade in this name, as Ford is now trading at a forward P/E multiple of just 7 times earnings while paying a 5% dividend yield. In a market enamored with growth stocks, a value stock like Ford tends to get oversold until investors realize there is very little risk left in the company. We don’t need Ford to rise much to realize a nice gain, and the impetus for such a move may be right around the corner.

Now that Ford has held up its end of the bargain by announcing this week that it will invest $1 billion in three plants in Michigan, it’s time for President Trump to deliver on his end of the deal. Trump needs a quick win after seeing his health care bill go down in flames last week and doing something to help the domestic auto industry would go a long way towards appeasing his bloc of mostly blue collar voters.

The quickest way for Trump to accomplish that is by narrowing the scope of the Border Adjustment Tax he intends to implement soon. By including concessions to businesses that have no viable domestic sourcing alternative, the BAT could essentially be reduced to protecting just a few large manufacturing sectors of the U.S. economy including the automakers. And even if he doesn’t go that far, just a friendly tweet or two directed at Ford might be all it takes to get a quick bounce.

NOTE: Ford is optionable, including a weekly option that expires on April 28 which is the day after the next date it is scheduled to release quarterly earnings if you want to bet on those numbers being better than expected.

Stock Talk

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Rob H.

03/30/17 ‐ 12:15pm ET March 30, 2017 at 12:15pm ET

F filled for 11.67 @ TDA

Thanks Jim

Rick

03/30/17 ‐ 12:44pm ET March 30, 2017 at 12:44pm ET

I bought the May 5 11.50 calls at $0.40. Wanted to have a little time after the earnings release.

Jim Pearce

03/30/17 ‐ 12:54pm ET March 30, 2017 at 12:54pm ET

Smart move. I like that trade!

Stephen Weil

04/03/17 ‐ 10:04am ET April 3, 2017 at 10:04am ET

reported very bad sales are we going to hold?

Jim Pearce

04/03/17 ‐ 10:12am ET April 3, 2017 at 10:12am ET

The overall sales figure reported by Ford this morning was actually a little better (i.e., less bad) than what it guided for, but combined with GM’s dismal report the overall take on the entire sector is negative. Ford is holding a conference call right now to go over the numbers, so let’s wait until this afternoon before making any firm conclusions. If it bottoms out above $11 and recovers a bit before the day is over then we’ll hold it, but if closes below my stop price of $10.75 then by rule I have to close out this position.

black arrow

03/30/17 ‐ 2:12pm ET March 30, 2017 at 2:12pm ET

Rick not sure if you are aware of this but great timing I’d say. I was taking in a webinar featuring Tom Bowley last week on stock charts.com. Tom was discussing about overall index of autos and used a FREE performance chart which showed over an 18 year period for some reason in April auto investments go up 9%.
I like that percent! I’ll check out the option you mentioned – Thanks Jim and Thanks Rick.

black arrow

03/30/17 ‐ 2:18pm ET March 30, 2017 at 2:18pm ET

Hi Jim,
I decided on the 19 May 17 11 call this is a monthly rather than weekly call I paid 0.79 for contract.
Cheers, my mid step kid is a Mustang Fan to ‘put’ it mildly

black arrow

03/30/17 ‐ 2:27pm ET March 30, 2017 at 2:27pm ET

for the visual folks: http://schrts.co/5V85uL

Janis Bell

03/30/17 ‐ 3:09pm ET March 30, 2017 at 3:09pm ET

Filled F today with a bit of trepidation after reading Stansberry’s dire predictions (last December) that F was so laden with bad debts that he’s betting on a radical drop in price by Jan 2018. Anybody else read his recommendations for long term puts on some 31 companies?

black arrow

03/30/17 ‐ 3:22pm ET March 30, 2017 at 3:22pm ET

Hi Janis, So far I am up $20.00 on the call I bt and that is a very short time ago, I bt it. I take the gloom and doom folks with a grain of salt. Guess I would rather put my Moolah on Jim Pearce Than Stansberry.. In January F will be in our rear view mirrors; as Jim said, holding period 2 months.
Keep in mind I consider myself to be Optimistic rather than pessimistic; which of course some folks may find fault with.

Michael S.

03/31/17 ‐ 2:05pm ET March 31, 2017 at 2:05pm ET

Filled Ford May 19 Call@11 option for $80 per contract.

black arrow

03/31/17 ‐ 2:46pm ET March 31, 2017 at 2:46pm ET

Hi Michael, Having traded some weekly options but more often monthly I was curious if you have noticed the return is a bit more on the monthly option. Seems that way to me, and was my reason for going with that one.
It seems too slow – not unusual on last day of a month in my observation, its because people like fund managers wait til day 1 of new month or last 5 minutes of the week. Its more enjoyable with more momentum to me, but I think we will get to our goal on Ford.
Personally I like the idea of “driving ” my car however haha. Call old fashion but “AI” give me a break how about our own intelligence haha

Jimmy Cook

03/31/17 ‐ 3:11pm ET March 31, 2017 at 3:11pm ET

Could you explain to me what is a weekly option. This one says May 19 Call. How did you know it was weekly?

black arrow

03/31/17 ‐ 3:46pm ET March 31, 2017 at 3:46pm ET

Sure Jimmy, Traditionally we have had monthly Options and the third friday of every month was Option expiration Day. Then at some point not sur exactly when wall st et al decided why cant we do this every week? So now there are more expiration dates. On one hand it seems good to, as some promoters may say “get paid each week”. But that is poor logic, it is not like you have a job, and wouldnt another pay check be great; because if it is your job, you have your pay; but in trading we dont win each week. Sometimes we don’t win each month or longer. See what I mean right now there is not a lot of momentum in markets. How to measure Momentum for example look at MACD histograms are they above the 0.0 line? If so there is momentum. Anyway when you look at an option chain they tend to have the word weekly after those expirations. Just my unofficial observation, Monthly option in same investment pays more. Also less tension from expiration each week. It is stressful to always be worrying each single friday abt expiration.
hope that helps explain it. this is just my opinion you may come up with a different outlook, it takes a while to see what you like better. Some people NEVER trade Options. I think Options are good but it takes some time and effort to learn.
enjoy your weekend [can be hard to do if you have overloaded yourself on too many contracts and think you are getting assigned] keep that in mind

Jimmy Cook

03/31/17 ‐ 4:05pm ET March 31, 2017 at 4:05pm ET

Thank you. That explains a lot. You have a good weekend too.

black arrow

03/31/17 ‐ 6:44pm ET March 31, 2017 at 6:44pm ET

Hi Jimmy,
Just got back from my local gym something I enjoy.
In case you are interested in how my Ford trade looks, here it is in my taxable or regular acct:
Bought 3 F May 19 2017 11.0 Call @ 0.79
This means I got 3 contracts it expires may 19 it is an 11 strike call and I paid 0.79 cents so for 3 contracts it was $237. Today I was going over a webinar I have heard before actually the presenter was saying we should not risk more than 5% of our account size on any trade if we have 10G’s or less and if we have a really big acc I think he said just 1%. His idea is you staying in the game for the long haul.
lets see if this will paste in: note how it says weekly on first one but not on may 19

F Apr 28 2017 28 Days to Expiration (Weeklys)
F May 19 2017 49 Days to Expiration

Jimmy Cook

04/01/17 ‐ 9:03am ET April 1, 2017 at 9:03am ET

I did the same but just bought 2 contracts. Did the F May 19 Call. I copied your March 30 post. We’ll see how it plays out. Good luck everyone.

black arrow

04/01/17 ‐ 11:05am ET April 1, 2017 at 11:05am ET

Good for you and for using good money management skills. I was reading Art Hill at stock charts; he was explaining key to stocks is TLT the 20 year bond so call up that chart. If TLT continues to go down to 116 it will be super for stocks. If Bonds go up it will be negative for stocksas well as gold. Here is a hopeful thing Tom Bowley used to be a CPA he is a numbers guy; he has mentioned the first week of the month the “money Flow” is highest [not an April Fool thing], this is because fund managers legally have to put $ to work, pensions come out etc this is an aid to propelling stocks. Now Art said last week was underwhelming on SP 500 breadth. We had some momentum, but are still in a corrective mode in some sectors

Jim Pearce

03/31/17 ‐ 4:31pm ET March 31, 2017 at 4:31pm ET

Trump just announced he is going after unfair trade, and specifically referenced “all of the good things happening in Michigan” so we could get some quick movement on this trade next week depending on how that is interpreted: http://www.cnbc.com/2017/03/31/trumps-new-executive-orders-kick-off-trade-agenda.html.

black arrow

04/11/17 ‐ 1:01pm ET April 11, 2017 at 1:01pm ET

Hi Folks, Looking at a shorter period time frame chart can help you see how things look right now. In the case of Ford; I want to bring to your attention how a daily is so different to a shorter one, I like to use 10 minute sometimes. On my 10 minute chart someone just bt 200 shares. link: http://schrts.co/XI1FkE
RSI 50 area is positive.

Smile

black arrow

04/11/17 ‐ 4:13pm ET April 11, 2017 at 4:13pm ET

Right now Ford is trading after hours a tad higher than the closing number.

black arrow

04/18/17 ‐ 9:21am ET April 18, 2017 at 9:21am ET

Hi, I noticed a headline on most recent Barrons at the top, it is of interest to those with a position in Ford.
If you want to google the title it does not sound positive- but hang in the news on Ford is good. Title is Stocks slip1% as Geopolitical Worries Grow.I needed to flip to page M4 to find the write up. …JP Morgan analyst Ryan Brinkmann described client events with Ford CEO .. writingford is ahead of the curve. Brinkman is bullish on FordHe carries an overweight rating and $15 price target. He also noted Ford looks cheap and possesses one of the most secureyields of the S&P500.
have a good one folks

Jimmy Cook

04/18/17 ‐ 10:51am ET April 18, 2017 at 10:51am ET

Hope that guy knows what he is talking about. Ford doesn’t seem to know what it wants to do. I’ts making me nuts.

black arrow

04/18/17 ‐ 2:58pm ET April 18, 2017 at 2:58pm ET

Id say he does know what he is talking about BUT, he has a different mind set from you or I. The “culprit” is really the FED. What do I mean by that? Check this chart on the 20 year bond: http://schrts.co/OTeird
It looks how we wish stocks looked right? This is what they mean by a flight to safety.
We are in “Risk Off” mode, but we are risk takers and we want things our way; but we need to go with the flow as traders. I dont picture TLT going higher than 126 See the red candle on Nov 8th ot marks a fallen window, and resistance. On the other hand Ford is forming a DOJI which signals change. There is some buying going on. The Bollinger Bands are contracting. We put in a bottom at red candle that says 10.96 next white candle was a HAMMER. Hammer hammers out the bottom. Totally a guess but the “squeeze in the Bands can mean next move is up. Its not Ford or Jim Pearce fer sur, its the FED trying to normalize after years of going too far the other direction. Like you I’ll take “RISK ON” anyday thats why I liked yesterday. We arte even in a correction some of us think. If you look at a chart of GLD it looks like yippee – here again a flight to safety. I am up in HL, and KGC too. The guy who is an analyst has a longer term outlook than us – we want our profits – and we want them Now thank you very much. :^)

black arrow

04/26/17 ‐ 11:14am ET April 26, 2017 at 11:14am ET

Hi Traders, I notice Ford is quietly inching ahead this AM. I was looking at a chart and the candle has broken thru the 50 day Exponential Moving Average RSI is strong and positive and I see some other buy signals.

Jimmy Cook

04/26/17 ‐ 1:02pm ET April 26, 2017 at 1:02pm ET

What about the tight Bollinger Band before the upswing? I am looking at a 15 minute chart. Was that a good indicator or not?

black arrow

04/26/17 ‐ 4:23pm ET April 26, 2017 at 4:23pm ET

“THE SQUEEZE” is telling us volatility is increasing. Myself I usually look at the BB on a daily chart. One of my presets is 10 minutes, but I never added bands til you mentioned it. Its abt 3:40 now between 11:30 anf 1 PM candles had rebounded. I got enrolled in Chauffeur to LaCrosse duties. It went sideways between 1 -2+ PM. So as I have mentioned before it is price that we rely on after a squeeze. I just switched back to daily. I can see the candle formed a wick on the top This means selling took place. Now we need to see how it shakes out in connection with earnings, which is before the open tomorrow. I had been hoping the Tax reform would get it over before the close, but this was not the case.

Jim Pearce

04/26/17 ‐ 4:51pm ET April 26, 2017 at 4:51pm ET

I think it will be the forward guidance, more so than the actual earnings, that will determine which direction Ford opens tomorrow. It’s not often that I know what kind of day I am going to have by 7:30 a.m., but tomorrow is one of them! 🙂

Jim Pearce

04/26/17 ‐ 1:42pm ET April 26, 2017 at 1:42pm ET

Interesting, since short interest in Ford has been rising this month (http://finance.yahoo.com/news/short-interest-ford-surges-11-105836697.html). Maybe some of the shorts are chickening out before tomorrow’s earning release and covering those positions?

black arrow

04/27/17 ‐ 8:13am ET April 27, 2017 at 8:13am ET

Good Morning Jim, Pre-market ford is up! Stats arre from my td Ameritrade page.
Change Since Close
0.25 (2.16%)

Jim Pearce

04/27/17 ‐ 10:02am ET April 27, 2017 at 10:02am ET

Mixed bag on the quarterly report; bottom line earnings beat estimates, but other than that there was nothing surprising: https://finance.yahoo.com/news/ford-1q-earnings-down-recalls-110857198.html. It is doubtful anything particularly exciting will happen during the next month to push its share price considerably higher, but you never know with so much tax and trade policy being discussed that could have a material impact on Ford.

Dramatic License

04/27/17 ‐ 12:27pm ET April 27, 2017 at 12:27pm ET

The silver lining is that if it can at least stay level we get a dividend that balances things out.

Derek: Las Vegas, NV

04/28/17 ‐ 11:28am ET April 28, 2017 at 11:28am ET

Exactly; yield is currently at 5.23%. I have no problem holding onto F unless we get some news that will push F down further.

Derek

Jim Pearce

05/02/17 ‐ 9:46am ET May 2, 2017 at 9:46am ET

Got some news today out of Ford that has pushed it lower: https://finance.yahoo.com/news/fords-april-us-sales-fall-7-2-percent-133357573–finance.html.

RP

04/28/17 ‐ 10:48am ET April 28, 2017 at 10:48am ET

Are you inclined to hold on to F or is the downside risk equal or greater to the upside potential now?

Jim Pearce

04/28/17 ‐ 11:07am ET April 28, 2017 at 11:07am ET

I am still mulling over what to do with Ford. At the moment, I don’t see where the impetus for an upside move would come from over the next thirty days, but I also don’t see what would push it down much further given how pessimistic the company has been regarding its near-term prospects and now priced at a forward PER of only 7x. My general rule is to leave a position open so long as it remains above its stop price so I’m inclined to hang to Ford until/unless there is a new development that causes me to change my outlook on it.

Jim Pearce

05/22/17 ‐ 10:28am ET May 22, 2017 at 10:28am ET

Big news out of Ford this morning, which hired a new CEO: https://finance.yahoo.com/news/ford-appoints-jim-hackett-ceo-123000340.html. This is good news in the long term and should cast the stock in a more positive light in the near term. It’s up 1%+ in early trading; I’m not expecting a big move but at this point anything will help. My target hold period expires in a week so I will reevaluate it then to see if there is enough positive momentum to justify extending this holding or just closing it out then.

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