Ford Motor (F) opened higher Monday, perhaps in reaction to the company's announcement of the naming a new CEO. Technical analysts do not really focus on the news, but rather watch the reaction of prices to news.
Do prices decline or rally on the announcement of what appears to be bearish news? Do prices rally or decline on the announcement of seemingly bullish news? We recently wrote about Ford for Real Money, and so far today's bounce is not changing the technical outlook.
In this updated daily bar chart of F, above, we can see that prices are still in a downtrend, with lower lows and lower highs. F is below the declining 50-day moving average line and below the declining 200-day moving average line. The daily On-Balance-Volume (OBV) line is still in a downtrend and suggests that sellers of F remain aggressive, with heavier volume being transacted on days when F has closed lower.
In the bottom panel is the 12-day momentum study, which shows a higher low from April to May despite prices making lower lows in the same time frame. This difference between price action and momentum is a bullish divergence and can foreshadow price gains.
In this weekly bar chart of F, above, we can see that prices are below the declining 40-week moving average line. It will take a strong close above $12 to close above the 40-week line. The weekly OBV line is still pointed down and the Moving Average Convergence Divergence (MACD) oscillator is below the zero line in a bearish mode or configuration.
Bottom line: New management can turn around a company's share price, but typically it can take a number of quarters for the change to translate into price action.
(This article originally appeared at 10:33 ET on Real Money, our premium site for active traders. Click here to get great columns like this from Bruce Kamich, Jim Cramer and other writers even earlier in the trading day.)
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