Iconic automaker Ford Motor Company (F) began 2018 with an earnings warning on Jan. 16. This warning was confirmed by a negative reaction to fourth-quarter results released on Jan. 24. The company is set to report first-quarter earnings after the close on April 25. Shares of Ford traded as high as $13.29 on Jan. 16 and declined 24% to the 2018 low of $10.14 on March 2. Ford closed Monday, April 23, at $11.04, down 10.6% year to date and deep in correction territory at 16.9% below the January high. Since the March low, the stock is up 8.9%.
Analysts expect Ford to post earnings per share of 41 cents when the company reports first-quarter earnings on Wednesday. Analysts expect year-over-year gains for earnings and revenue. Investors will be concerned about comments regarding the rising prices for aluminum and steel, difficult foreign exchange volatility, rising auto loan rates squeezing Ford Credit's margins and spending on autonomous vehicles.
The earnings per share that analysts expect Ford to post.
I have been an owner of Ford vehicles for many years, and I have learned to like the Lincoln brands. One reason for my preference is that the Lincoln service experience is so much better than at Ford dealerships. A recent problem for Ford is the leftover 2017 models, including some Lincoln lines. The 2018 Lincoln models were delayed into January.
I recently traded my 2004 Lincoln Town Car for the 2018 Lincoln Continental, and it took until the end of January to get delivery. The dealership bought my new car to my home and spent more than an hour showing me all the features. For service, the company will drive a loaner to my home and drive my Continental to the dealership for servicing. My experience so far has been excellent, and as an aside, my salesman told me that they had 15 Lincoln Navigators priced at $75,000 in stock and a backlog of orders for the $90,000 model.
The daily chart for Ford Motor
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The daily chart for Ford Motor shows the price gapping lower as 2018 began. This decline fell below my semiannual pivot of $11.71 on the negative reaction to earnings on Jan. 25. This is shown as the second horizontal line from the top of the chart. The stock has been below its 200-day simple moving average of $11.50 since Jan. 25. After trading to its 2018 low of $10.14, the stock has stayed below its 200-day moving average and today is trading around this week's pivot of $11.08.
The weekly chart for Ford Motor
Courtesy of MetaStock Xenith
The weekly chart for Ford Motor would end the week positive with a close on Friday above its five-week modified moving average of $11.02. This would target the 200-week simple moving average or "reversion to the mean" at $13.20. The 12x3x3 weekly slow stochastic reading is projected to rise to 42.99 this week, up from 35.10 on April 20.
Trading strategy: Buy Ford shares on weakness to my quarterly value level of $10.05 and reduce holdings on strength to my semiannual and monthly risky levels of $11.71 and $11.87, respectively.