Trade of the Day: Ford (NYSE:F)
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Today, we're opening a new bearish trade on Ford (NYSE:F). Auto dealers and manufacturers are in a tough spot. The economy is chugging along OK, but the demand we saw over 2015-2016 has dropped off a cliff.
Unfortunately, production is more difficult to slow - especially now that such actions risk condemnation from the government in Washington D.C. Inventory to sales ratios and turnover times are at highs we haven't seen for eight years.
We think these are some of the most important reasons that F hasn't participated in the rally with the rest of the market.
Despite the long-term consolidation, we like a bearish position on F as the odds for a breakdown have increased significantly. Used car dealers are often a leading indicator for F, and they have already been selling off for a few weeks.
'Buy to open' the F April 13 Puts (F170421P00013000) for a maximum price of $0.67.
You can learn more about identifying price patterns and using them to project how far you think a stock is going to move in our Advanced Technical Analysis Program.
InvestorPlace advisers John Jagerson and S. Wade Hansen, both Chartered Market Technician (CMT) designees, are co-founders of LearningMarkets.com, as well as the co-editors of SlingShot Trader, a trading service designed to help you make options profits by trading the news. Get in on the next SlingShot Trader trade and get 1 free month today by clicking here.
This article was written by John Jagerson and Wade Hansen for InvestorPlace on Mar 20, 2017.
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