Chart of the Day – F and TM for Talking Numbers

by Enis August 1, 2012 1:55 pm • Commentary

Here’s a preview of what I’ll be discussing on Talking Numbers today between 3:30 and 3:35 pm EST on CNBC:


Dan pointed out the potential head and shoulders formation on Ford all the way back in early May:  here.  Ford has since gone on to break down from the $10 neckline that Dan pointed out back then, and that level should serve as formidable resistance going forward.  Here’s the 3 year chart:



Following a clean break of $10, the stock has never looked back.  I don’t think the stock offers a good entry for a long or a short position here, but I do think $10 should act as formidable resistance given the importance of that level.  Another point that Dan made to me was Ford’s debt load.  Since it is the only major U.S. carmaker that did not go through bankruptcy, its debt load is a substantial overhang relative to the competition.  Though GM has been a very weak stock as well, suggesting that carmakers in general reacting to economic weakness more broadly.  Worth keeping an eye on how the chart develops.

Toyota Motors (symbol TM) has been a better performer than either F or GM.  Its chart is more neutral.  Here is the 3 year chart:



The one concerning aspect of this chart is that TM has made a lower low in November 2011 and then a lower high in the spring of this year, indicating a potential long term trend change for the stock.  I think global weakness is likely to weigh on TM as well, though I don’t see any attractive trading opportunity here at the moment.