Visteon (VC)

Company

VC 1-year chart VC 1-year chart

"Visteon Corporation is a leading global automotive supplier that designs, engineers and manufactures innovative climate, interior, electronic and lighting products for vehicle manufacturers, and also provides a range of products and services to aftermarket customers. With corporate offices in Van Buren Township, Mich. (U.S.); Shanghai, China; and Kerpen, Germany; the company has facilities in 26 countries and employs approximately 45,000 people." (company website)

VC 6-month chart
VC 6-month chart

Sell short

I made a few bucks on Visteon last year after an earnings surprise. At the beginning of the year it looked like Visteon had reversed and was trending up, but that came to a screaming halt in May when VC surprised The Market with a much larger than expected loss. Since then, a new downtrend seems pretty clear.

  • Price momentum (PPO) — negative and creeping up while prices have fallen
  • Relative strength (RSI) — stuck just below neutral for almost three months
  • Trend (ADX) — weak, and selling pressure (-DI) is above buying pressure (+DI)
  • Volume — falling off noticeably

Based on technical analysis, MarketEdge calls VC a "short candidate" in a "weak downward trend."

Buy to cover

gain Bottom line
7%

VC shares jumped 3% this morning on news that Pardus Capital Management L.P. (a hedge fund) bought 1 million more shares, raising its stake in VC to 19.3%. I decided to cover. VC is clearly still below the trend line, and this could be a purely temporary effect. I do have room to wait and see. On the other hand, people could think, Well, if Pardus is going shopping, may so should I, thus driving up the price. In this crazy market, I think it's better to take a modest profit while it's available than to risk losing it.