Extend Alert: Ford Motor Co. (F)

By Jim Pearce • May 30, 2017

TRADE INSTRUCTIONS
Date: May 30, 2017
Name: Ford Motor Company
Symbol: F
Type: Extend
Extension Period: 1 month

TRADE RATIONALE
Our original two-month holding period for Ford expires today, which I am extending for one month. In my “May 21 in Review” article at the end of this week, I will explain my view of the market and how it informs my decisions to extend both Cisco and Ford through the end of June.

On May 17, Ford closed only one penny above our stop price in the wake of an uninspiring first quarter earnings report. Last week the company replaced its CEO, and since then the stock has stabilized around $11.

I don’t know if we will make it all the way back to our entry price of $11.72, but if F breaks through its upper Bollinger Band (currently at $11.27), then we could get back above $11.50 without too much resistance. However, the $10.75 stop price will remain in effect.

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Jim Pearce

06/01/17 ‐ 11:13am ET June 1, 2017 at 11:13am ET

At last, some good news out of Ford today! https://finance.yahoo.com/news/u-auto-sales-may-likely-driven-heavy-discounts-134253240–finance.html. The stock is up 3% this morning; it did break above its upper Bollinger Band and topped out exactly at $11.50 as I predicted it might. A nice start to the month.

Dramatic License

06/01/17 ‐ 11:15am ET June 1, 2017 at 11:15am ET

Really enjoying this, and most of my stocks today!

Dramatic License

06/02/17 ‐ 10:00am ET June 2, 2017 at 10:00am ET

Dividend was posted to my account today – more good news!

Jim Pearce

06/02/17 ‐ 10:10am ET June 2, 2017 at 10:10am ET

The current forward dividend yield for F is 5.4%, more than two and half times greater than the yield on the 10-year Treasury note. So, unless you think Ford will go bankrupt over the next ten years or will cut its dividend by at least 60%, the yield spread doesn’t make much sense. That disparity probably won’t do much to help Ford’s share price now, but eventually it should pull it up into the mid/upper teens to bring it back into equilibrium.

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