Ferrari NV Stock

Hello you very wonderful and intelligent individuals, i very much hope you are doing well and keeping happy.

I have been following the stock Ferrari NV (BIT: RACE) which has been in a strong uptrend for over 5 years. This is the stock in the EUR currency. It has strong earnings which are increasing such as revenue. The company is also engaging in a large buyback which will hopefully increase the share price. I kindly wondered please if anyone had any thoughts whether the revenue from the business will continue to increase and how long this uptrend could last please? If anyone kindly had any thoughts on this it would mean the world to me and i would be forever grateful and highly appreciate it.

Sending you lots of good wishes and i truly hope you continue to have a wonderful life. Very best wishes to you.

Personally I am very cautious about the premium brans but they can be very strong stocks - I just have a bit of an issue with some of the brands.

It has had strong performance and it has a fairly unique brand with loyal customers. Thus I can see the arguments for it. However, I am very unsure about the automotive sector long term especially when fully autonomous vehicles become established (that tech could destroy the automotive market).

I would be very cautious in terms of the chart. Clearly if you are invested based on belief in the fundamentals or just love for the brand then you might hold irrespective of the chart. However, looking at the chart there is the possibility of consolidation at the present level or some retracement. Obviously news or fundamentals could mean the price breaks above 370 and continues the upward trend. However, when it hit 370 it quickly fell back and didn’t strongly test 370. Multiple indicators suggest that indicators have turned slightly negative. That could easily reverse but I think shows a strong potential of bouncing off 370 again and pulling back. Assuming the price doesn’t break 370 there is a big question whether price just consolidates or pulls back more before testing 370 again (assuming fundamentals can support it retesting 370 and continuing to rise long term).

There are a few articles ramping the long term potential and suggesting that it is a good buy. They might be right and it may be an undervalued bargain at the moment but it has already had good rises in price and I am generally sceptical of seeing lots of articles ramping a stock and the cynic in me often thinks they are timed to help people exit at a good price before a pullback.

The problem with a pullback is where does the pullback find support. There is very weak support possibly about 350 but the price rose so strongly there aren’t any clear support levels until you get to about 330 or 325 (and below that 321 and 315). So potentially a pull back could go back to somewhere in the 330-350 range (possibly lower). If you look at when the price hit 325 in July 2023 it isn’t inconceivable for the price to consolidate in a similar way but $50 higher. Ultimately after the price hit 325 in July it did retest the level but then dropped all of the way beck to support at 286 so it isn’t hard to see the price again going back to support levels.

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Thank you very much for your very helpful and knowledgeable post WakeMeUp that is another very fabulous post. I really do appreciate your time writing this.

I agree that Ferrari at the moment has strong fundamentals, however that could change, when fully autonomous vehicles become established. However this might not affect revenues for a very long time.

I believe if the fundamentals for the next quarter which are due to be released early 2024 are even stronger, this could help the share price go even higher. Can i kindly please ask what you are looking at specifically what indicators, chart timeframe and any candlesticks to indicate a possible consolidation or retracement please? I am just trying to understand this much more clearly, if you kindly had time to reply, it would mean the world to me and i would be more grateful than i could ever write in words. From my understanding this stock showed quite strong Technical Indicators and hopefully a continuation of this long term uptrend.

It seems that the stock may have been ramped alot with various articles, which is good for people who want to make some good short term trades. However the share buyback and further stronger fundamentals i believe could send this alot higher.

Sending you lots of good wishes WakeMeUp and i truly hope you achieve massive success with your investing. Thank you very much for your time as always you are amazing. With my every best wish.

Hi Robert

I use a lot of indicators but they are mostly custom indicators so difficult to illustrate. Essentially at the moment I think they are very mixed. The bounce off 370 has caused some indicators to turn negative and other to bend towards being negative but still stay positive. The rise from 1st Nov was a good rise and started with a nice gap up (twice) but in the last week of the rise there were two red candles and the candles weren’t that long (actually true range was slightly decreasing). When price hit 370 it bounced straight off it, the next day was a lower indecision candle and then a red candle closing lower than the previous two lows and the next day was a gap down. Thus the price didn’t put up a significant fight at 370. Today the price opened at 366 and basically dropped all day closing below yesterday’s green close. To me that doesn’t show significant strength but it’s possible that tomorrow it will be green and test 370 but my suspicion is that it might struggle to exceed today’s open of 366 and if tomorrow is a red day that would suggest it is going to at least consolidate.

If you look at the long term chart you can see that there was a sustained rise (up to 325) and then a downtrend until it reversed and continued up. That is a classic chart formation - long term uptrend, breakout to the downside to move sideways and slightly down and then continue up. There is always multiple ways to draw the trendlines but the basic pattern is pretty clear.

Looking at the chart since July 2023 the price hit 325, fell back and then made a new high (330) and then broke the long term uptrend to the downside first with an indecision candlestick and then testing the uptrend as resistance (and failing to break back into the upward channel) and then falling to make a lower lower. I’ve drawn a white dotted downward trendline from the 330 peak and an orange upper channel for the downtrend. It was making repeated lower lows. I’ve circled the highs with blue circles and you can see an initial higher high while the price was still in the upward channel but then lower highs. Even after the price broke the downtrend (orange circle) it still made a lower high (last blue circle) but then made a higher low (end of the green line) before starting the strong recent rise.

The recent rise isn’t completely broken (and it depends on how you draw the trendlines) but it is clearly on the verge of being broken for the time being. To continue the recent rise would require significant momentum. I’ve drawn 3 red lines highlighting that price could continue upwards, could easily move sideways perhaps in the 350-370 range or could drop with the next real support being 330.

After the July peak of 325/330 it took 3.5 months to consolidate before making the recent strong rise which started just below 300 (so it had lost 10%).

I’ve drawn two dotted white lines for the recent upward channel and I’ve put a solid white line parallel to the dotted lines but from the end Oct low/start of the uptrend. If you use the solid white line the price is still in the up channel and the price is still holding onto the lower of the two dotted white lines (and rising red line). Thus I don’t think the upward channel is convincingly broken. The next few days will probably establish what direction its going to go.

I would also beware that even if the price breaks 370 in the next day or two it isn’t convincing that the price has a lot of strength and thus it could fakeout 370 (ie breakout through 370 appearing to be going up only to drop). Thus personally (not knowing anything about the fundamentals other than the cars are nice and often red) I would be extremely cautious at the moment (which probably means it will rocket and surprise everyone).

Long term chart
chart race1

Chart since July with first blue circle being when the price hit 325 in early July
chart race2

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Thank you very much WakeMeUp that is a very wonderful response, i really do appreciate your time to help me, i will be forever grateful and thankful for your support with this.

I have gone through this post you have made and the post about Ryanair with the charts you have displayed. I can now understand the difference and these visual charts really helped me. In particular, now i can understand why you put emphasis on the red candlesticks. As these can hinder a long term uptrend, so i am very thankful for your detailed response to this, thank you so much.

I am very sorry for all my questions, you have been amazing you are a fantastic person. I was just trying to get this clear in my head, how you fully understand all the different candlesticks, oscillators to get a picture of where the stock could be heading. I did not fully grasp this until your recent post, so thank you again from the bottom of my heart.

Can i kindly please ask quickly whether you need to use the candlesticks, i know some people have success with just the Moving Averages and oscillators please?

Lastly i am really sorry to ask, about this, but most likely as i have not learned enough about resistance and support i dont fully understand this. You mention the following: “I’ve drawn a white dotted downward trendline from the 330 peak and an orange upper channel for the downtrend. It was making repeated lower lows. I’ve circled the highs with blue circles and you can see an initial higher high while the price was still in the upward channel but then lower highs.” Can i kindly please ask how you know how to plot these white lines for the trendline which creates this upward channel please? If you kindly had time to answer this it would mean the world to me, its just not really clear in my mind, but everything else i understand perfectly.

Thank you so much for your support WakeMeUp, once again you are an absolute credit to this forum and the best member i have spoken to on any investment forum. Look after yourself and hope you achieve massive success in the stock market. Very best wishes to you.

I have developed my own custom scripts to help with my chart analysis so its not easy to answer some questions and everyone tends to develop their own favourite method and preferred indicators.

I think you find it useful to have detailed comments and to then go away and do some reading and study. Thus I will try to give a reasonably detailed answer rather than just a superficial one.

If I do a chart analysis without the aid of my own analysis scripts I probably first look at the overall shape of the long term chart and start from there. That gives an overall feel for the stock. I would then put on some of the main horizontal/flat support and resistance levels from the obvious major levels. Where there is a sustained movement in a particular direction (up, down or sideways) I would then probably look if it created a channel - which is what would normally happen for a sustained trend rather than a short term movement. Thus a trend that is sustained over a few months or more will generally have a channel. The price may have broken out of that channel at times but I can normally see a distant channel fairly clearly. Generally the main channel limits will connect multiple candles often including either highs (for upper channel limit) or lows. If you get it right you will normally see the price either hugging the line at times or bouncing off it If you look at the white dotted lines for the recent rise you will see the price hugging both lines particularly the upper line. The lines are just guides and act to mark the channel. They aren’t necessarily as fixed as horizontal/flat sr lines. They can help to indicate when the price breaks out of the channel but prices do often go outside upward or downward channels at times. In general price will stay in a horizontal/sideways channel much more and as a very general rule its probably more important to pay attention to breakouts in horizontal channels because they often either indicate a significant breakout (ie move to a completely different channel or direction) or are a fakeout (ie price moves in one direction as a fake move and then after a few days makes a strong move in the opposite direction). A break of a up or down channel can often simply move price into an identical parallel channel (ie direction is maintained just a slightly higher or lower channel - ie the long sustained rise I would say had two parallel halves to the overall channel and moved from one half to the other a couple of times during the overall rise. There are several classic continuation chart patterns where a channel breaks, price moves in the opposite direction for a while and then resumes the original direction. An example is the long sustained rise up to 330 and then a downward consolidation channel before resuming the upward trend. This was a classic continuation pattern.

So in summary - I tend to view flat sr levels as harder forms of support or resistance whereas upward or downward channels are a bit more flexible (ie even if the price breaks the channel limits it often either forms a parallel channel in the same direction or starts a consolidation pattern before resuming the original trend direction). Up and down channels do break and reverse but I think its more complicated than horizontal channels where the price tends to stay clearly within the channel until the channel breaks and those breaks can often result in strong moves up or down.

I do like moving averages. My own scripts use probably 12 or more moving averages of different types (both simple and more complex forms of ma). In the script I also use least square regression with multiple timeframes to find price direction and predict future price. I do think moving averages (and crossovers etc) are very good but my script does all of that for me now so I don’t tend to look at the individual lines much now but at the moment I am modifying this part of my scripts to add in calculation of multiple anchored vwap to 1) create further support/resistance lines and 2) for the script to use with the other moving averages to create a composite indicator which I do heavily rely on. The way I calculate this composite indicator creates a highly sensitive indicator (ie responds within 1 chart bar to indicate potential change in trend but has some mathematical filters applied to reduce false signals and create clear buy/sell signals. As a general guide I think moving averages are very good especially if you look at the crosses (ie one ma moving over another) and look at whether price is above/below or crossing. The trick is finding the right time periods because if you look at very long time period ma it is a very lagging indicator which isn’t good for some stocks that don’t have sustained trends whereas normally fast moving ma can be too sensitive and generate too many false signals. Also ema or other forms of moving average will be more responsive than sma but sma are good for overall trend.

I don’t use bollinger bands or macd. I know some people are fans of both but I have never got on with them. I do like RSI and Stochastic but don’t use either now because my scripts contain highly modified forms of them to overcome what i felt were weakness in both rsi and stochastic. However, even in their standard forms I think rsi and stochastic are both good indicators.

I also use Williams Fractals, Heiken Ashi and supertrends and my script calculates forms of all of these to combine with the other indicators. Individually they all have strengths and weakness so its a question of how you combine them or analyse them - ie what you use to confirm indicator signals.

I do think there is a difference between what you can reasonably do as chart analysis by just looking at a chart and what is possible by writing code or a script to analyse it all mathematically. Thus something like Heiken Ashi will have several theories on how to get confirmation or determine buy/sell signals but I think that a script can be far more complex and subtle. Nothing is perfect and scripts takes a massive amount of refinement but can potentially be far more complex and look at a wide range of factors.

The actual candlesticks I look at somewhere in the middle of the analysis and at the end. Candlesticks by themselves are not very reliable indicators but they can be good at confirming other aspects of the analysis. With moving averages and support/resistance the candlesticks are fairly powerful at showing how the price is interacting with the ma or SR levels. With the other indicators (ie rsi, stochastic, etc.) I think the candlestick give more of a confirmation or double check

So my basic list is:

  • flat support resistance
  • inclined channels (support resistance lines)
  • moving averages
  • candlesticks (ie look at how price interacts with ma or sr lines)
  • rsi and stochastic + some others
  • candlesticks to confirm the overall analysis

As I say everyone has their own method, own preferred way of doing chart analysis and own preferred indicators. There is no one perfect way or solution. Its all personal choice

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Thank you very much WakeMeUp, what another fabulous post, thanks so much for all your time, you have been wonderful. I cant thank you enough for your support.

I really like you also have left a kind of mini checklist of your own protocols which includes, the flat support resistance, inclined channels (support resistance lines), moving averages, candlesticks, rsi and stochastic with some others. Thank you very much for this it does mean alot.

I also liked the explanations in relation to when there is a sustained movement if this has created a channel, this i feel was very important, its not something i have researched. Further paying attention to the horizontal channels because they often indicate a significant breakout or are a fakeout. I really appreciate your support with this, its means alot.

I am going to do some further reading on the Williams Fractals and Heiken Ashi supertrends so i can possibly use these with other indicators. Your script sounds amazing, i sincerely hope this is helping you achieve massive success in the stock market. It seems you are an incredibly hard working and intelligent person, i really hope all your hard work is paying off you very much deserve it.

Sending you lots of good wishes and i truly hope you continue to have a wonderful life and you achieve massive success. Thank you for all your time, my heart goes out to you for your kindness. Very best wishes to you.

Supertrends are different to Heiken Ashi.

My scripts are a work in progress but very happy with how it is developing.

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Don’t think chart analysis will give you a magic solution. It won’t. Personally I don’t use it to decide investments; I use it to time buys and sells.

If you do the research and find a company that you really like then chart analysis can help you to time trades and enable you to trade it rather than simply buying and forgetting

That’s just my view

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I own a bit of RACE through SMT.

Generally, I’m not a fan of the car industry as an investment due to the business model.

I’ve never liked that you can extend the life of the product and people don’t buy cars during a downturn.

That said, Ferrari’s a bit different as a premium brand. I think I’m right in saying it has better a ROCE and gross margins than much of the industry.

Nowadays, a lot of young people don’t even want to drive – especially if they live in a big city.

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I just read a great research on luxury companies, and Ferrari was among the ones discussed: