F Ford Weekly Chart

Ford continues to sink lower into the depths of despair and agony as the trade wars escalate. The auto sector is at the center of the Mexico, Canada, Europe and China tariff wars. The erratic price action over the last year is a result of the ongoing trade war rhetoric. F is now at lows not seen since early 2013 and that thick congestion period (blue circle). Price may chomp around at these levels since traders that held on to the stock since then are making decisions on whether to stick with the car maker or jump ship.

Last week, F popped over 10 but finishes at 9.48. These are large intraweek moves. This morning, Ford says it may can up to 12% of its workforce which would be bullish for the stock. When companies ax workers, they tell the existing employees to pick up the slack or they will end up in the unemployment line as well. This reduction in expenses and increase in production typically leads to higher stock prices. That is why layoff news usually results in a pop in stock price.

President Trump asked the EU a couple months ago to back a plan for zero tariffs on automobiles. The EU called his bluff last week offering zero tariffs on autos to the US but Trump balked at the idea changing the goal posts. More European car are sold to Americans than visa versa. Many consumers like the Volkswagen, Mercedes and BMW models. The president cannot make Europeans or American buy US cars. People usually like a style and stick with it.

Nonetheless, when a trade deal or multiple deals are reached in the auto industry, it is a safe bet that the car stocks will rally. F price has violated the lower band so the middle band at 10.75, and falling, is on the table. The green lines show positive divergence at play which will buoy price but the red lines continue to show weak and bleak behavior preferring a few lower lows in price in the near-term. Price may hold this congestion area from 2013.

Keystone does not hold any position in any auto manufacturer but the arena is interesting from a speculation point of view. It may be worthwhile to place trades and maintain tight stops underneath since any positive trade news will likely create sharp rallies like late 2017 and earlier this year. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.