Ford Break Out to Remain If...

September 12, 2013, 09:25 am ET, BY Neal- Contributor| Editor: Thomas H. Kee Jr. (Follow on LinkedIn)

According to August auto sales data, the US market is up over 10% so far in 2013 at 10.65 million registrations. Pick-up trucks represented five out of the seven biggest gainers for the year, and the Ford Motor Company’s (NYSE:F) F-Series took the top spot, up 22%. Ford has benefited from strong growth in China, and record domestic sales. After a 30% move up in the stock, is Ford a buy, sell or hold?

Ford has always been an undisputed leader in light trucks; the F-Series has been America´s best-selling vehicle for 36 consecutive years. However, Ford is seeing the most growth opportunities in China. Ford sold 71,183 wholesale units in China during the month of August, an increase of 46% versus last year. The company plans to spend $5 billion on new plants in China over the next 5 years, and introduce 15 new vehicles there by 2015.

In addition to the strong truck sales, Ford also is hitting the mark with its smaller cars and even its hybrid models. The compact Ford Fiesta saw a 61.5% jump in sales, but more importantly the Focus and Fusion, which are much bigger sellers, posted growth of 6.8% and 13.7% from a year earlier. It was Fusion’s best ever August, with sales at 24,653 vehicles.

The company has come a long way from the financial crisis in 2009, as Ford shares are up more than 990% from the lows. While domestic rivals Chrysler and General Motors Company (NYSE:GM) were bankrupt, Ford managed to make it through without requiring money from the government. Now, 5 years later, the company looks very strong, after reporting its best sales month since 2006. According to the Stock Traders Daily report, shares of Ford have recently broken above resistance, and resistance is now converted support.   If it stays that way we expect higher levels, but hat converted support line now also acts as risk control.  It must hold for the currently positive bias to remain.

Ford’s competition is doing well too, as its Japanese competitors delivered strong figures, with Honda Motor Co Ltd (NYSE:HMC) and Toyota Motor Corporation (NYSE:TM) reporting sales growth of 27% and 23%, respectively. The biggest U.S. automaker, GM, reported a 15% increase in overall sales and 22% growth in US retail sales.

While consumer spending has softened over the summer, and a number of retailers have been falling short of expectations, the automotive market has proven resilient so far. Ford shares are trading near a 52-week high, and as long as the stock remains above converted support, as defined in our real time trading report, Stock Traders Daily expects higher levels.

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