Are Ferrari shares worth buying after recent crash?
28th November 2018 08:45
by Alistair Strang from Trends and Targets
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The Italian luxury car maker's share price has skidded off the track in recent months despite growing profits the previous quarter. Chartist Alistair Strang looks under the bonnet for indications as to future direction.
Ferrari (NYSE:RACE)
We opted to await the end of this year's Formula 1 season before glancing at Ferrari. Even the most cynical eye cannot help but note their share price performance has tended to mirror their race pace - often boring and lacklustre. The situation now tends to suggest the price has some coming 'short' potentials.
At time of writing, it's trading around the $105 level, skirting with danger as there's a raised kerb at $104. To cut to the chase, weakness now below $104 will be viewed as entering a cycle down to $93.5 next.
If broken (and once any fake bounce completes) our secondary comes along at $84.7 and visually, there are ample reasons to hope a reasonable rebound occurs at such a level.
To get out of trouble convincingly, the price needs exceed the fat red line on the chart, presently at $114.50.
Early warning of a viable escape attempt looks like moves bettering $111. This shifts the price into a region where $114 becomes an initial ambition.
While secondary - and a probable stutter - calculates at $121.5, along with recovery above the trend, we suspect the price intends a drop, this encouraging us to demand a wide stop at the far red line!
We've littered the chart with some truly grotty longer term drop potentials. At present, absolutely nothing suggests $58 or $39 as possible contenders. Only if the share were to actually close a session below $84 would panic become a valid emotion, the prancing donkey looking very capable of trampling investors.
Source: Trends and Targets Past performance is not a guide to future performance
Alistair Strang has led high-profile and "top secret" software projects since the late 1970s and won the original John Logie Baird Award for inventors and innovators. After the financial crash, he wanted to know "how it worked" with a view to mimicking existing trading formulas and predicting what was coming next. His results speak for themselves as he continually refines the methodology.
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