Visteon (VC)

Company

"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 more than 170 facilities in 24 countries and employs approximately 50,000 people." (company website)

Buy

21-Apr-06. Companies associated with the automobile industry are going through a bad patch right now, and VC has been in a steep slide since last September (see sidebar). But, the decline leveled out between $4 and $5 and appears to be headed back up. This is definitely an "early buy" into what looks like the beginnings of an uptrend.

• Price momentum (PPO) — steadily increasing over past three months, more sharply in last two weeks
• Trend (ADX) — strengthening again after a long decline, although still below the threshhold (20)
• Money flow (CMF) — sharp inflow of money this week
• Relative strength (RSI) — picking up sharply
• Volume — three consecutive up days this week with increasing volume

Sell

26-Apr-06. Today Lear (another automative parts manufacturer) surprised the market with better than expected earnings, and the whole sector took off with Visteon leading the pack. I decided not to look a gift horse in the mouth — I sold my shares.

I had purchased VC just after a big price spurt that put it beyond the upper Bollinger band. Today's push even farther out simply increases the odds of a pullback when the enthusiasm wears off and people remember that Visteon is still expected to lose 48¢ a share when it reports earnings in early May. So, I think it's prudent to take some profits and await earnings.