Sector- Consumer Discretionary/Automotive
Ford is another household name on our list of 10. Its about as American as baseball and apple pie. They have always been known for their trucks, but recently they have been moving to fit the current consumer demand, and that is for more fuel efficient vehicles; I personally have been impressed with the looks of the new Fusion Hybrid.
As an American consumer myself I tend to notice changes in trends and styles; a big part of investing is simply using your eyes to identify what people are buying and using. Something I have noticed recently are a ton of Ford Fusions on the road. Now, I like to have my hunches backed up with data and Ford offers me that in spades. Just taking a brief look at their recent financial performance I can see a company that is paying down debt, has high growth potential and record sales. These stats tend to point toward higher prices in stocks and Ford is moving right along as expected.
After a massive rally from 2009-early 2011, the stock has gotten whacked and lost more than half its value from $19 down to $9. Recently however we have begun to see a swing to the positive for Ford. Not only are they producing record sales but their stock has been going through a major trend reversal.
The shorter term picture looks incredibly strong. Ford has recently broken out of a great Inverse Head/Shoulder base and has exploded to a new 52-week high. The most important thing for me to see here is the fact that price has recently taken out the prior 52-week high resistance and continued to move higher. That is very bullish activity.
The fact that it has overtaken the $13 level and sustained has lead me to believe that a trend change has taken place and this stock could easily test its 5-yr high at $19. However, this breakout has been furious and I would be hesitant to jump on board right here. I want to see this consolidate these large gains a bit. I am looking for an entry at the $13 level; remember prior resistance becomes new support. So the $13 level should provide a launch point for the next move higher and that's where I will look to get involved.
Patience is key when you are trading, I have struggled with it the whole time. But you will find that your worst losses occur because you took on a little too much risk and didn't let the game come to you. Trying to force a trade is one of the quickest ways to lose money. You won't catch every move and you will have to watch as some big winners fly right across your watch list. But if you plan your move in advance, you will know exactly what to do when the right moment presents itself; you won't freeze, you will act. And you will know exactly what to do. That is how you win in the markets. Let other traders make the mistake of being over eager, we simply sit back and catch the best risk/reward we can. There will always be another big winner, the market will continue to create opportunities for us, and we will need to be prepared when it does.
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