“Be fearful when others are greedy, and be greedy when others are fearful” — Warren Buffett
A Key way to measure the level of fear in a stock is through we technical analysts call the RSI (Relative Strength Index), which measures momentum on a scale of Zero to 100. A stock is considered to be oversold if the RSI reading falls below 30.
In trading Thursday, shares of Ferrari (NYSE:RACE) entered into very oversold territory, hitting an RSI reading of 28.3, after changing hands as low as 185.12/share.
A Bullish investor could look at RACE’s 28.3 RSI reading today as a sign that the recent heavy selling is at exhaustion mark and begin to look for entry point opportunities on the chart, as the Stochastic is flashings Very Bullish.
The 2 November gap is closed. So Buy side action is expected. The chart below shows the 7 month performance of RACE.
Looking at the chart above, RACE’s low point in its 32 wk range is 190.70, with 233.66 the high, and 185.12 the low, that compares with a last trade of 187.78.
Ferrari is The Aristocrat of the automotive sector.
Our overall technical outlook is still Bullish, a Key indicators are Bullish long-term. Ferrari reported strong earnings for Q-3 on 3 November and did the same for Q-4 and F-Y 2020 as reported on 2 February.
Ferrari closed Thursday 187.78 within its 52 wk range of 127.73 – 233.66 in NY. It’s all time high in NY was marked at 233.66 intraday on 29 December.
A Key technical indicator has turned Very Bullish. Ferrari’s stock is very oversold in here, but the pattern still indicates the confirmation of the break out at 196.01 on 3 November and confirmed.
The Key support is at 197.25 and the Key resistance is at 195.83 at the close Thursday in NY.
Note: At the beginning of Y 2020 I called RACE at 230 by year’s end, the stock was trading at 165.22 on 1 January 2020, on 29 December 2020 it marked 233.66 intraday, its all time high
The Maranello Outfit’s shares were raised to Buy from Hold at HSBC, and Buys at Morgan Stanley and Bank of America.
UBS is now calling the stock at 365. Citi downgraded the stock from Neutral to sell. I have not seen any other Street downgrades.
Ferrari will continue to create value in the long term as it becomes the world’s 1st Super Luxury brand.
Ferrari is a quality 1st long term luxury products investment, BAML raised its call to 270 long term.
I have raised my long term target to 375, a Strong Bull call, the strongest on the Street and am holding the mark during this recent profit taking, and seeing RACE as a buying opportunity.
Ferrari has an average rating of Buy and a consensus target price at 243.60.
The Maranello Outfit’s shares were raised downgraded from Buy to Hold at HSBC Thursday.
Ferrari will continue to create value in the long term. Ferrari is a quality 1st long term luxury products investment, and I am calling it 375 long term, the Top on the Street, and adjusting it to 250/share short term.
A number of large investors have recently bought shares of RACE, and there has been just 1 instance of insider selling over the past yr that we have seen.
The stock is considered defensive in the sector.
Have a healthy weekend, Keep the Faith!