Ford Motor Co. shareholders were among the most miserable market participants during the crash of 2007-2009, since the stock plummeted to slightly above a dollar a share in November 2008. Fortunately, the company managed to survive and in January 2011 was already trading close to the 19-dollar mark. The problem is that Ford has been going nowhere but south ever since, and, while near 12.50, the Elliott Wave Principle suggests it might fall even more, before it is worth buying again.
The theory states the direction of the trend could be recognized by spotting a five-wave sequence, called an impulse. The rally from $1 to $19 between November 2008 and January 2011 could be seen as such. But every impulse is followed by a three-wave correction in the opposite direction, before the larger trend resumes. That is what we believe has been in progress since 2011 – an (a)-(b)-(c) zig-zag correction. Wave (a) is another impulsive pattern, followed by a deep wave (b). Wave (c) does not look like an impulse so far, so we could expect it to develop as an ending diagonal.
If this is the correct count, Ford stock might lose more than 30% of its value from now on, because the bears seem to be aiming at the 61.8% Fibonacci level, which, in terms of price, means levels around 8 dollars a share. In our opinion, that is the area, where Ford stock would be worth investing in, because once the retracement is over, the uptrend should resume. Patience is key.
