American automakers got off to a great start in 2019. Share prices were rising, brands were slimming down, and more importantly, consumers were buying their vehicles.
It was a huge change from 2018, where companies like Ford Motor Co. (NYSE: F) saw their stock do little but sell-off.
But Ford’s 2019 rally ended, sadly, peaking in July before dropping like a stone in August. Now, Ford shares remain up on the year, but a way’s off from where they were four months ago. General Motors (NYSE: GM) had a similar experience.
Much of the drop can be attributed to the trade war, which negatively impacted Ford’s China-focused plans for expansion. CEO Jim Hackett said as much in a press release from a few days ago.
“China is leading the world with smart vehicles, and is a key part of Ford’s global vision for the future. We are excited about seeing more products developed in China, for China and from China,” Hackett said.
“Ford is deeply committed to China, and with our new China leadership team and vision, we’re investing in the future — a future that starts today.”
But despite the recent selling, American car companies are finally making a comeback. Ford and General Motors both set higher lows a few weeks ago relative to their lows of late 2018.
Unlike GM, though, F is really starting to “round a corner,” and if the stock keeps rising, we could have a huge trade on our hands.
In the weekly candlestick chart above, you can see that F just broke out above the current trendline with this week’s candlestick. That’s a very positive sign, and with stochastics lingering near 50, it appears as though F has plenty of room to move.
Add to that the presence of a higher low (relative to the low of late 2018), and you’ve got the makings of a bullish swing – one that would end F’s 5-year skid.
Should F rise above the current week’s high by a sufficient amount, it might make sense to go long at a trade trigger of $9.30. That price level sits above resistance from three candlesticks ago as well as the 50-week moving average.
With all the immediate psychological price barriers conquered at $9.30, F would likely continue climbing.
Best of all, this move looks like the first in a longer-term trend that will feature several rallies and corrections – all of which could potentially be tradable.
So, over the next week, keep an eye on F. If the stock goes higher, it could be time to go long.
