Ford stock gaps upward on open on debt reduction announcement

After reporting a buyback of preferred stock to reduce debt, Ford stock (NYSE: F) opened higher at the open and holds its gains.
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The chart shows a rise still in play after hours into the open. Short-term price support is in the 15.90 area

Of course, the news of the step down of Hosni Mubarak in Egypt is causing the dollar to strengthen and oil to retreat from its recent rise. Both are good for auto sales.

According to the Ford media release, Ford Motor Company Capital Trust II will redeem for cash all of its outstanding 6.50% Cumulative Convertible Trust Preferred Securities (NYSE: F PR S) on March 15, 2011, as a result of Ford's redemption of all of its outstanding 6.50% Junior Subordinated Convertible Debentures

Although the previous decline of the Ford stock held its mark and was the biggest one-day percentage drop since April 2009 when shares fell 7.7%, it didn’t means Ford was in trouble long term, as its stock had a great performance for 2010.

Still, the market is a forward-looking mechanism; and this debt reduction is definitely a forward-looking positive.

Recall it was only a few weeks ago that Ford stock was labeled as a growth story per Mad Money’s Jim Cramer at Dearborn Truck Plant. Anyone who watches Cramer on a regular basis knows he likes to back up the truck and take any opportunity in downturns in Ford stock to buy more.

Fact is, most had up to the decline believed that the fundamentals of Ford were strong. Furthermore, Ford Motor Company was slated by Jim Cramer to possibly double.

Again, when asked about the comparison between Ford and GM, Cramer noted that “GM is a hopeful turnaround, but Ford is a growth story.”

For the record, the 2011 North American International Auto Show (NAIAS) in Detroit showed Ford with the largest display ever. Their car designs and technology are viewed as cutting edge; and this venue is continuing in Europe with the 81st Geneva Motor Show.

My own look at a 15 minute chart showed Ford taking off right out of the open gate. And this was before the Mubarak announcement.

For the record, though, the day chart shows Ford stock trading within the 13-day moving average channel (blue). However, the channel and the day bars are trading below the 50-day moving average (red), which, from a trader perspective, is still corective; or, as some say on CNBC, cautiously optimistic.

Disclosure: Frank Sherosky, creator of the chart and author of "Awaken Your Speculator Mind" does not hold any stock or option positions in this equity at this time.

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About the Author: After 39 years in the auto industry as a design engineer, Frank Sherosky now trades stocks and writes articles, books and ebooks via authorfrank.com, but may be contacted here by email: [email protected]

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