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What Drove Optimism for Mainstream Automakers in September 2017?

PART:
1 2 3 4 5 6 7 8
Part 6
What Drove Optimism for Mainstream Automakers in September 2017? PART 6 OF 8

Could Ferrari Resume Its Rally in October after a Weak September?

Ferrari stock

Ferrari stock (RACE) traded on slightly negative note in the week ended September 29, 2017, and settled at $110.48 with a weekly fall of 2.6%.

With that, the stock fell 3.5% in September. But it still maintains its year-to-date rise of ~90.0% against a 12.5% rise for the S&P 500 (SPY) so far in 2017.

Could Ferrari Resume Its Rally in October after a Weak September?

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Key support and resistance levels

On September 6, 2017, Ferrari stock posted an all-time high of $118.10, which should act as a key resistance going forward. An immediate resistance level lies near $113.70. Any violation of this immediate resistance level could attract fresh buying for the stock.

The price tested a swing support level near $108.50 twice in September. Its 14-day RSI (relative strength index) indicator was hovering at 54.2 on October 2, suggesting a minor strength in momentum.

Possible reasons for September weakness

A Reuters report on September 7, 2017, said that Morgan Stanley double downgraded its ratings on Ferrari stock from “overweight” to “underweight.”

A report by The Street mentioned that Morgan Stanley analysts have become concerned about Ferrari’s valuation. That could be why the trend in Ferrari stock reversed in September.

Ferrari has reported positive EPS (earnings per share) growth in the last eight quarters. This consistent solid performance could challenge the bears on Wall Street and help Ferrari resume its rally in October.

It’s worth noting that Ferrari’s profit margins are much higher than mainstream automakers (XLY) Fiat Chrysler (FCAU), Ford (F), and General Motors (GM).

In the next part, we’ll see how Harley-Davidson stock traded last week.

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